Which of the following correctly describes the interest-rate effect?
a. If the price level decreases, consumer purchasing power decreases, the demand for credit rises, interest rates rise, debt-financed borrowing decreases, and real GDP demanded falls.
b. If the price level decreases, consumer purchasing power increases, the demand for credit rises, interest rates rise, debt-financed borrowing decreases, and real GDP demanded falls.
c. If the price level decreases, consumer purchasing power increases, the demand for credit falls, interest rates rise, debt-financed borrowing decreases, and real GDP demanded falls.
d. If the price level decreases, consumer purchasing power increases, the demand for credit falls, interest rates fall, debt-financed borrowing increases, and real GDP demanded increases.
d
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The informal sector differs from the formal sector in that informal firms tend to
a. be larger b. be more capital intensive c. operate more apart from the usual laws and regulations d. produce goods and services not found elsewhere e. none of the above
The best measure of a change in the standard of living is the change in
a. nominal GDP. b. real GDP. c. real per capital disposable income. d. net national product.
The term “recession” refers to a
a. period of decline in real GDP over two consecutive quarters. b. fall in the general level of real wages over two consecutive quarters. c. fall in the CPI over two consecutive quarters. d. fall in the rate of increase of real per capita GDP.
When the dollar depreciates, this shifts the AD curve rightward and the SRAS curve leftward, leading to a higher price level
Indicate whether the statement is true or false