The stability of consumption over the business cycle and the ability of changes in the real interest rate to redirect aggregate demand indicate that
a. government policy can improve the performance of the economy.
b. market economies are inherently unstable.
c. a market economy has a self-correcting mechanism that will help guide it toward full employment.
d. recessions will be lengthy, and high rates of unemployment will persist for a period of time even after the economy recovers.
C
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Wages for workers producing iPods and similar products will rise next year. Walkman Watch asks you to predict the effect of this change in next year's market for iPods. You predict that the major effect will be that the
A) demand curve for an iPod will shift rightward. B) demand curve for an iPod will shift leftward. C) supply curve for an iPod will shift leftward. D) supply curve for an iPod will shift rightward.
What determines the supply of loanable funds and what makes it change?
What will be an ideal response?