Which of the following is incorrect?
A. As the price level falls, the demand for money declines, the interest rate declines, and interest-rate-sensitive spending increases.
B. As the U.S. price level rises, U.S. goods become relatively more expensive so that U.S. exports fall and U.S. imports rise.
C. Given aggregate demand, an increase in aggregate supply increases real output and, assuming downward-flexible prices, reduces the price level.
D. When the price level increases, real balances increase and businesses and households find themselves wealthier and therefore increase their spending.
Answer: D. When the price level increases, real balances increase and businesses and households find themselves wealthier and therefore increase their spending.
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The study of economic mobility discussed in the text pinpoints five factors that are correlated with economic mobility. What are those five factors and how do they affect economic mobility?
What will be an ideal response?
If charity is a collective consumption good then government redistribution of resources can be justified on the basis that _____
a. government can act as a catalyst to encourage more private giving b. government helps deal with the prisoner's dilemma problem c. government overcomes the free riding problem d. government consumption is one-third of gross domestic product