As prices rise, people will buy fewer goods and services because
a. the interest rate has declined.
b. aggregate demand has increased.
c. the purchasing power of the fixed quantity of money has declined.
d. the income of households has increased.
C
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In explaining the downward-sloping aggregate demand curve, the wealth effect is:
a. When the price index falls, the real money supply falls, causing the real risk-free interest rate to fall, and the value of bonds (wealth) to rise. b. When the price index falls, the real money supply falls, causing the real risk-free interest rate to rise, and the value of bonds (wealth) to rise. c. When the price index falls, the real money supply rises, causing the real risk-free interest rate to fall, and the value of bonds (wealth) to rise. d. When the price index falls, people become wealthy because they earn higher nominal incomes, and the price of everything they purchase is cheaper. Therefore, they are wealthier. e. None of the above.
If total output increases from $1 trillion to $2 trillion as population increases from 100 million to 250 million, then output per person:
A. remains constant. B. doubles. C. decreases. D. increases, but by less than 100 percent.
If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium:
A. output would necessarily rise. B. output would necessarily fall. C. price level would necessarily fall. D. price level would necessarily rise.
Refer to the information provided in Table 14.1 below to answer the question that follows. Table 14.1B's Strategy ?Raise PriceDon't Raise Price?RaiseA's profit $3,000A's profit $10,000?PriceB's profit $3,000B's profit $15,000A's Strategy????Don'tA's profit $15,000A's profit $5,000?RaiseB's profit $10,000B's profit $5,000Refer to Table 14.1. Firm A?s optimal strategy is
A. to not raise the price of its product. B. dependent on what Firm B does. C. to raise the price of its product. D. indeterminate from this information, as no information is provided on Firm A?s risk preference.