Suppose there has been an increase in investment. As a result, real GDP will ________ in the short run, and ________ in the long run
A) decrease; increase to its initial level B) increase; increase further
C) increase; decrease to its initial value D) decrease; decrease further
C
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Which of the following statements is true of optimization?
A) Optimization analysis only relates to the financial budget of an economic agent. B) Individuals who optimize do not consider costs when choosing the most feasible alternative. C) Economic agents can optimize only when they are able to perfectly estimate all future costs and benefits. D) Economic agents who optimize attempt to choose the best feasible option, given the information that they have.
A decrease in the nominal interest rate ________ the opportunity cost of holding money
A) increases B) decreases C) can increase or decrease D) None of the above answers is correct because the nominal interest rate does not affect the opportunity cost of holding money.