The real-balances effect on aggregate demand suggests that a:
A. Lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending
B. Lower price level will decrease the real value of many financial assets and therefore cause an increase in spending
C. Lower price level will increase the real value of many financial assets and therefore cause an increase in spending
D. Higher price level will increase the real value of many financial assets and therefore cause an increase in spending
C. Lower price level will increase the real value of many financial assets and therefore cause an increase in spending
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If a rise in the price of good B increases the quantity demanded of good A
A) A and B are substitutes. B) A and B are complements. C) A is a substitute for B, but B is a complement to A. D) B is a substitute for A, but A is a complement to B.
Suppose that for several periods the aggregate demand and supply curves have been intersecting at the same point, and at full employment. Then the central bank increases money growth as the result of an announced policy change
Under New Classical assumptions the likely short-run result is __________ output and __________ price level. A) rising; a rising B) rising; an unchanged C) unchanged; a rising D) unchanged; an unchanged