The economy is in the horizontal portion of the AS curve, there is a liquidity trap, and investment spending is sensitive to changes in the interest rate. According to the Keynesian transmission mechanism, if the money supply increases the interest rate __________, investment spending __________, the AD curve __________ and the price level __________
A) falls; rises; shifts to the right; rises
B) falls; rises; shifts to the right; remains unchanged
C) does not change; does not change; does not change; does not change
D) does not change; shifts to the left; does not change; rises
E) rises; falls; left; falls
C
Economics
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Suppose an economy has the following characteristics: 100 people in the noninstitutional population; 40 people employed; 50 people not in the labor force. How many people are unemployed?
A) 100 B) 90 C) 50 D) 40 E) 10
Economics
The idea that economic agents do not make systematic errors because they use all information efficiently is called the
A) consistency hypothesis. B) rational expectations hypothesis. C) information efficiency hypothesis. D) principle of maximizing behavior.
Economics