The wealth or real balances effect indicates that
A. a higher interest rate will increase the real value of many financial assets and therefore cause an increase is spending.
B. a higher interest rate will decrease the real value of many financial assets and therefore cause a decline in spending.
C. an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and increase spending.
D. a lower interest rate will increase the real value of many financial assets and therefore cause an increase in spending.
A. a higher interest rate will increase the real value of many financial assets and therefore cause an increase is spending.
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If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy
Indicate whether the statement is true or false
An HMO hires radiology services from India to cut costs. If all else remains equal, this will
A) decrease net exports. B) increase the current account balance. C) decrease the balance of trade. D) decrease the financial account.
A subset of the general population that holds an intense preference with respect to a particular government activity is called a
A) public-service group. B) special interest group. C) union. D) federation.
Built-in stabilizers
A. are insufficient to prevent the business cycle, but tend to lessen fluctuations in real GDP. B. were introduced under President Nixon. C. are found primarily in discretionary fiscal policy. D. tend to lessen fluctuations in GDP through their effect on the money supply. E. were endorsed by Adam Smith.