Suppose the economy is in a recession and the Central bank lowers the monetary policy rate. Then
A. Real GDP and the price level will both decrease.
B. Real GDP will increase and the price level will decrease.
C. Real GDP will decrease and the price level will increase.
D. Real GDP and the price level will both increase.
Ans: D. Real GDP and the price level will both increase.
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Blanca would prefer a certain income of $20,000 to a gamble with a 0.5 probability of $10,000 and a 0.5 probability of $30,000. Based on this information:
A) we can infer that Blanca neutral. B) we can infer that Blanca is risk averse. C) we can infer that Blanca is risk loving. D) we cannot infer Blanca's risk preferences.
A positively sloped long run average cost implies:
a. economies of scale. b. constant returns to scale. c. diseconomies of scale. d. diminishing marginal returns to a factor. e. increasing returns to scale.
Which of the following best describes the relationship between the velocity of money and the demand for money?
a. The demand for money is not related to the velocity of money. b. When the demand for money increases, the velocity of money increases. c. The demand for money must be stable for the velocity of money to increase. d. When the demand for money declines, the velocity of money increases.
Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, wages in the shoe industry ________ and wages in the computer industry ________.
A. increase; increase B. increase; decrease C. decrease; decrease D. decrease; increase