A spending shock
a. causes unemployment and inflation to change in the same direction
b. results in a movement along the AD curve
c. shifts the AS curve
d. first affects the economy through the money market
e. causes equilibrium GDP to change at each price level
E
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Indicate whether the statement is true or false
In the text, U.S. and Mexico specialize in the production of corn and oil, respectively. They trade and both end up with more corn and oil. How much each gains from trade depends on
a. who has the comparative advantage b. who has the absolute advantage c. how efficiently the U.S. and Mexico produce corn and oil d. the import/export ratio e. the price of oil in terms of corn
In the production function, the variable K represents human capital
Indicate whether the statement is true or false
If reserves in the banking system increase by $100, then checkable deposits will increase by $667 in the simple model of deposit creation when the required reserve ratio is
A) 0.01. B) 0.05. C) 0.15. D) 0.20.