If velocity does not change and the quantity of money grows at the same rate as does real GDP, then in the long run
A) the real interest rate is less than the nominal interest rate.
B) the inflation rate equals zero.
C) the nominal interest rate equals zero.
D) the inflation rate equals the growth rate of the quantity of money.
E) the nominal interest rate is less than the real interest rate.
B
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The precautionary principle is most likely to be applied when some impacts
a. Involve option values b. Are irreversible c. Are converted to present values d. Are estimated using the avoided cost approach e. Involve indirect use values
Based on the figure above, the aggregate demand curve will shift from AD0 to AD1 when
A) the Federal Reserve lowers the interest rate. B) government expenditure decreases. C) the price level falls. D) the price level rises. E) potential GDP increases.