How will an increase in the world price of crude oil influence the economy of an oil-importing country such as the United States?
a. Aggregate supply will decrease, leading to a decrease in real GDP.
b. Aggregate supply will increase, leading to an increase in real GDP.
c. Aggregate supply will increase, leading to an increase in prices and smaller GDP.
d. A change in the price of an imported good will not affect the domestic economy of an oil-importing country.
A
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If a bank receives $2,500 of reserves by selling a government bond to the Fed, its ability to make loans increases by $2,500
a. True b. False Indicate whether the statement is true or false
When the spending of consumers, businesses, government, and foreigners (net exports) is less than the aggregate output level of the economy, the Keynesian model result is that:
a. output will rise. b. output will fall. c. prices will rise. d. inventories will tend to decline.