An unexpected increase in the supply of money will
a. reduce the real rate of interest and, thereby, trigger an increase in current spending by households and businesses.
b. reduce aggregate demand and real output in the short run.
c. increase only the general level of prices in the short run.
d. lead to a higher rate of unemployment in the short run.
A
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A factor that turned out to be a weakness of the classical theory of growth is its
A) emphasis on saving and investment. B) assumption that the growth rate of the population increases when income increases. C) reliance on constant growth in technology. D) neglect of the subsistence real wage.
Refer to Table 9-11. Which country has an absolute advantage in producing clocks?
A) Denmark B) Belize C) both countries D) neither country
Evidence from business cycle fluctuations in the United States indicates that
A) a negative relationship between money growth and general economic activity exists. B) recessions are usually preceded by declines in bond prices. C) recessions are usually preceded by dollar depreciation. D) recessions are usually preceded by a decline in the growth rate of money.
In the late 1980s, the health benefits of oat bran were widely advertised. If the price of oats increased 50%, causing the quantity of oats supplied to increase by 40%, then the price elasticity of supply was
A) 1.25. B) -1.25. C) -0.80. D) 0.80.