Suppose the economy is initially at equilibrium, in which total planned real expenditures equals real GDP. Which of the following will occur if there is an increase in autonomous investment?
A) Inventories will decrease immediately and production of goods and services will increase until real GDP catches up with total planned real expenditures.
B) Inventories will increase immediately and production of goods and services will decrease until real GDP catches up with total planned real expenditures.
C) Inventories will not change and production of goods and services will not change either.
D) Both inventories and production of goods and services will increase.
A
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As long as wages and prices are flexible, an anticipated change in the money supply will lead to an increase in
A) the unemployment rate. B) industrial production. C) nominal income. D) real wages.
Inflation targeting alleviates the problem of
a. money multiplier instability that makes money targeting difficult. b. time inconsistency. c. a lack of credibility in monetary policy. d. both b and c. e. all of the above.