Holding other factors constant, if terrorist attacks increase the desire for precautionary saving, then the real interest rate will ________ and the equilibrium quantity of saving and investment will ________.
A. decrease; decrease
B. decrease; increase
C. increase; increase
D. increase; decrease
Answer: B
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A decrease in the money wage rate increases ________ and an increase in the full-employment quantity of labor increases ________
A) the SAS and the LAS; only the SAS B) the SAS and the LAS; only the LAS C) only the SAS; the SAS and the LAS D) only the LAS; the SAS and the LAS
In monopolistic competition, a firm must determine what price to set for its good because
A) the demand for its good is not perfectly elastic. B) the demand for its good is perfectly elastic. C) there are many buyers. D) there are many sellers.
The country of Glassen has experienced an expansionary gap for the last three years. The advocates of passive policy are likely to suggest a policy which causes _____. a. the short-run aggregate supply to shift to the left
b. the short-run aggregate supply to shift to the right. c. rising prices to shift the aggregate demand to the left. d. wages to fall relatively quickly. e. aggregate demand to shift to the right as wages increase.
The nominal exchange rate is 32 Russian rubles per dollar. The price of a bushel of wheat is 260 rubles in Russia and $7 in the U.S. A. What is the real exchange rate? Show your work. B. Can arbitragers make a profit? C. If your answer to B is yes, where would arbitragers buy and where would they sell