John Maynard Keynes believed that wages may be inflexible in the downward direction. Consequently, an economy
A) could get stuck in long-run equilibrium.
B) could get stuck in a recessionary gap.
C) could get stuck in an inflationary gap.
D) would always produce more than Natural Real GDP.
E) b and c
B
Economics
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In the basic closed-economy ISLM model, the money market can be described by the
A) money demand function. B) money supply. C) money market equilibrium condition. D) all of the above.
Economics
"If the money supply rises by $1 billion, GDP will rise until it alone increases the quantity of money demanded by $1 billion." This describes the situation when
A) an IS curve shifts against a horizontal LM curve. B) an IS curve shifts against a vertical LM curve. C) a vertical LM curve shifts against an IS curve. D) a horizontal LM curve shifts against an IS curve.
Economics