If people expect the Fed to adopt a(n) ________ for several years, the long-run real interest rate will remain ________
A) contractionary fiscal policy; high B) expansionary fiscal policy; low
C) expansionary monetary policy; low D) contractionary monetary policy; low
C
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Which of the following is a reason why increases in the price level result in a decline in aggregate expenditure?
A) Price level increases in the United States relative to other countries raise net exports, which lowers aggregate expenditure. B) As the price level rises, government spending falls, which lowers aggregate expenditure. C) Price level increases cause firms and consumers to hold more money, which raises the interest rate. Higher interest rates lower consumption and planned investment expenditures, which lowers aggregate expenditure. D) Price level increases raise real wealth, which causes consumption spending and aggregate expenditure to decline.
According to the new Keynesian sticky-price theory, a rise in aggregate demand results in ________ price level in the near term and in ________ price level in the longer term
A) a higher; an unchanged B) an unchanged; a higher C) a lower; an unchanged D) a lower; a higher
The law of demand implies that:
What will be an ideal response?
The impact of a decrease in expected inflation in the bond market will have a relatively large effect on the prices of bonds prices because the bond demand curve:
A. will shift right as will the bond supply curve. B. will shift left as the bond supply curve shifts right. C. and supply curves will shift left. D. will shift right but the bond supply curve shifts left.