Ans: D) an increased price level, but no change in real Gross Domestic Product (GDP) in the long run.
Assume the Fed initiates an expansionary monetary policy that is correctly anticipated by economic agents in the economy. According to the rational expectation hypothesis, the result is
A) an increased price level in the short run, but no effect on price level in the long run.
B) decreased real Gross Domestic Product (GDP) in the short run, but increased real Gross Domestic Product (GDP) in the long run.
C) increased real Gross Domestic Product (GDP) and increased employment in the long run.
D) an increased price level, but no change in real Gross Domestic Product (GDP) in the long run.
Economics
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Refer to the above figure. The highest price that consumers would be willing to pay for quantity Q2 is
A) P2. B) P0. C) P1. D) cannot be determined from the diagram.
Economics
Assume that the demand curve for a commodity is represented by the equation Q = 25 - 1.3P. Calculate the change in total spending for this commodity when price falls from $4.50 to $4.20
a. Total spending rises by $4.11. b. Total spending declines by $4.11. c. Total spending declines by $8.20. d. Total spending rises by $8.20.
Economics