Homework Answers
"C"
the income level of inflation implies that when the price level increases, the income held by individual decreases and hence the spending decreases. The answer is "C".
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The income effect of inflation implies that when: A) the price level decreases, the income held...
The theory of liquidity preference implies that an increase in the price level shifts the Select...
The theory of liquidity preference implies that an increase in the price level shifts the Select one: a. money demand curve to the right, so the interest rate decreases. 0 b. money demand curve to the left, so the interest rate increases. C. money demand curve to the right, so the interest rate increases. d. money demand curve to the left, so the interest rate decreases. If the marginal propensity to consume is 6/7, then the multiplier is 7. Select...
25. When the price of a good decreases and all else is held constant a. both...
25. When the price of a good decreases and all else is held constant a. both consumer surplus and producer surplus decrease b. producer surplus decreases c. both consumer surplus and producer surplus increase d. producer surplus increases
Which is a common effect of inflation? a. Saving habits do not change during inflation b....
Which is a common effect of inflation? a. Saving habits do not change during inflation b. The Federal Reserve decreases interest rates to curb inflation c. When prices increase, purchasing power decreases d. Employment increases as well as economic growth
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate i...
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate in order to stabilize the price level. As a result US dollar appreciates causing US exports to decreases. a. False b. True If the Fed increases money supply, then: a. the value of money decreases. b. the price level increases. c. Both of the above d. none of the above Which of the following will the Aggregate Demand curve...
1. Modern macroeconomists tend to believe that an increase in aggregate spending A) increases real output,...
1. Modern macroeconomists tend to believe that an increase in aggregate spending A) increases real output, especially in a depressed economy with lots of excess capacity, but also increases the price level, especially in an economy with little excess capacity B) always increases real output without affecting the price level as the simplest version of the "Keynesian cross" model with a fixed price level impliesalways increases real output without affecting the price level as the simplest version of the "Keynesian...
When the Federal Reserve decreases the growth of the money supply, the income afect causes the...
When the Federal Reserve decreases the growth of the money supply, the income afect causes the interest rate to while the liquidity effect drives the interest rate Continuing on the same tran thought when the Fed decreases the growth rate of the money supply the price level ofect drives the interest rate while the expected inflation rate pushes the interest rate Suppose there is an increase in the growth rate of the money supply the liquidity effect is smaller than...
a. 22. Proponents of zero inflation argue that reducing inflation implies which of the following? that...
a. 22. Proponents of zero inflation argue that reducing inflation implies which of the following? that reducing inflation eventually reduces inflation expectations b. that reducing inflation eventually raises real interest rates that reducing inflation permanently decreases output d. that reducing inflation permanently raises unemployment c.
4. Show income and substitution effect on graph when price of a normal good decreases. (10...
4. Show income and substitution effect on graph when price of a normal good decreases. (10 points)
1. Other things equal, a decrease in the price level ________ the equilibrium interest rate and ________ equilibrium output. a. increases; increases b. increases; decreases c. decreases; increases d. decreases; decreases
1. Other things equal, a decrease in the price level ________ the equilibrium interest rate and ________ equilibrium output. a. increases; increasesb. increases; decreasesc. decreases; increasesd. decreases; decreases
The drop down menu for B is price level (decreases, increases, returns to initial value) and...
The drop down menu for B is price level (decreases, increases,
returns to initial value) and output (decreases, increases, returns
to initial value)
The drop down menu for D is price level (decreases, increases,
returns to initial value) and output (decreases, increases, returns
to initial value)
Use the AD/AS model below to answer the following questions. In each case, assume the economy starts In long- and short-run equilibrium. The Macroecono in long- and short-run equilibrium LRAS SRAS 100.0... AD Real...
The theory of liquidity preference implies that an increase in the price level shifts the Select one: a. money demand curve to the right, so the interest rate decreases. 0 b. money demand curve to the left, so the interest rate increases. C. money demand curve to the right, so the interest rate increases. d. money demand curve to the left, so the interest rate decreases. If the marginal propensity to consume is 6/7, then the multiplier is 7. Select...
25. When the price of a good decreases and all else is held constant a. both consumer surplus and producer surplus decrease b. producer surplus decreases c. both consumer surplus and producer surplus increase d. producer surplus increases
When the Federal Reserve decreases the growth of the money supply, the income afect causes the interest rate to while the liquidity effect drives the interest rate Continuing on the same tran thought when the Fed decreases the growth rate of the money supply the price level ofect drives the interest rate while the expected inflation rate pushes the interest rate Suppose there is an increase in the growth rate of the money supply the liquidity effect is smaller than...
a. 22. Proponents of zero inflation argue that reducing inflation implies which of the following? that reducing inflation eventually reduces inflation expectations b. that reducing inflation eventually raises real interest rates that reducing inflation permanently decreases output d. that reducing inflation permanently raises unemployment c.
4. Show income and substitution effect on graph when price of a normal good decreases. (10 points)
The drop down menu for B is price level (decreases, increases,
returns to initial value) and output (decreases, increases, returns
to initial value)
The drop down menu for D is price level (decreases, increases,
returns to initial value) and output (decreases, increases, returns
to initial value)
Use the AD/AS model below to answer the following questions. In each case, assume the economy starts In long- and short-run equilibrium. The Macroecono in long- and short-run equilibrium LRAS SRAS 100.0... AD Real...
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