Explain the separate effects of each event on U.S. real GDP and the price level, starting from a position of long-run equilibrium
What will be an ideal response?
The expansion in the world economy increases U.S. exports and increases aggregate demand, which increases real GDP and raises the price level. The expectation of higher profits in the future increases investment and boosts aggregate demand, which increases real GDP and raises the price level. The increase in government expenditure on goods and services increases aggregate demand, which increases real GDP and raises the price level.
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The annual growth rate of an economy is 10 percent. The economy's GDP will double in about ________ years
A) 12 B) 10 C) 20 D) 7 E) 14
As opportunity cost of holding money increases, people can
A) do nothing. B) increase the demand for money but not the quantity of money they hold. C) find a better job. D) try to maximize marginal benefit. E) seek substitutes for money.