In the Keynesian model in the short run, a decrease in the money supply will cause
A) a decrease in output and an increase in the real interest rate.
B) an increase in the real interest rate but no change in output.
C) a decrease in the real interest rate and a decrease in output.
D) no change in either the real interest rate or output.
A
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Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?
A) Trade restrictions have a limited impact because most Americans prefer domestic goods over imports. B) Consumers pay a high cost for jobs saved through trade restrictions. C) Trade restrictions benefit consumers in the short run but not in the long run. D) Statistics show that trade restrictions actually do not save jobs.
Suppose that the value of the short-run absolute elasticity of demand for a good is 0.4. Then, we know the long-run absolute price elasticity of demand will be
A) 0. B) greater than 0.4. C) elastic. D) less than 0.4.