If profits are high because the price level rose,
A) the AS curve shifts leftward.
B) it is likely the result of an increase in the real wage rate.
C) business failures rise and the quantity of real GDP supplied increases.
D) new businesses open and the quantity of real GDP supplied increases.
E) potential GDP must be decreasing.
D
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The interest rate at which businesses borrow to fund their investments is higher than the real interest rate for short-term, safe loans, because ________
A) business borrowers sometimes default on their loans B) autonomous investment is not dependent on borrowed funds C) the central bank controls the short-term, safe interest rate D) the interest rate is negatively-related to business optimism E) all of the above
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The GDP Price Index and reserve-related (central bank) transactions remain the same. c. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same. d. The GDP Price Index rises, and reserve-related (central bank) transactions become more positive (or less negative). e. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.