The distinction between real and nominal shocks is that
A) real shocks directly affect only the IS curve, but not the FE line or LM curve.
B) real shocks directly affect only the FE line, but not the LM curve.
C) real shocks directly affect only the IS curve or the FE line, but not the LM curve.
D) real shocks have a large direct effect on the IS curve and the FE line, but only a small direct effect on the LM curve.
C
You might also like to view...
Suppose that the equilibrium price of pickles falls while the equilibrium quantity rises. The most likely explanation for these changes is:
A. an increase in the supply of pickles. B. an increase in demand for pickles. C. a decrease in demand for pickles. D. a decrease in the supply of pickles.
Goods and services that are consumed by the ultimate user are called ________ goods and services.
A. nominal B. final C. value added D. intermediate
Assume that there are two nations, Alpha and Beta. Each nation produces two products, wheat and steel. Alpha has a comparative advantage in the production of wheat. If the two nations trade, the trade price of wheat in terms of steel will be
A. greater than the domestic opportunity cost of wheat in both nations. B. less than the domestic opportunity cost of wheat in both nations. C. less than the domestic opportunity cost of wheat in Alpha and greater than the domestic opportunity cost of wheat in Beta. D. greater than the domestic opportunity cost of wheat in Alpha and less than the domestic opportunity cost of wheat in Beta.
If consumers increase saving during a recession, what will this do and why?
What will be an ideal response?