"Purchasing power" of money:
a. Is the value of money measured in terms of how many goods and services it will buy.
b. Is the value of a currency expressed in a foreign currency.
c. By definition, falls over any given period of time.
d. Is the value of money adjusted for price differences among countries.
e. Correlates positively with the inflation rate.
.A
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If both autonomous imports and autonomous taxes decrease by $100B we expect that equilibrium income will
A) increase by more than $200B. B) decrease by more than $200B. C) increase by $200B. D) remain unchanged.
Gordon suggests that full indexation of production costs to nominal AD would solve the macroeconomic externality. However, individual firms would be unlikely to extend full indexation to their workers because
A) its local customers may not buy its products at the new price level. B) its suppliers may reside in foreign countries and are therefore, not subject to indexation. C) other competitor firms will not index their wages. D) All of the above.