Real business cycle theory explains variations in prices, employment, and real Gross Domestic Product (GDP) by focusing on
A) changes in real variables such as supply shocks, technological changes, and shifts in the composition of the labor force.
B) anticipated changes in fiscal policy enacted by the government.
C) the effects of the Phillips curve.
D) anticipated monetary policies enacted by the Fed.
A
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If the U.S. government sells bonds to fund improvements in infrastructure, and the bonds are bought by foreigners, the burden on future U.S. taxpayers
A) is not increased so long as the return on the improvements is at or above the borrowing cost. B) is not increased so long as the return on the improvements is below the borrowing cost. C) is not increased so long as the return on the improvements is above zero. D) is increased regardless of the borrowing cost and the return on the improvements.
If supply is perfectly inelastic and demand increases,
a. price falls and output rises. b. price rises and output falls. c. price rises and output remains unchanged. d. price rises and output rises.