For a given level of inflation, if a resolution of international disputes leads to a cutback in government military spending, then the ________ shifts ________.
A. short-run aggregate supply line; downward
B. aggregate demand curve; left
C. short-run aggregate supply line; upward
D. aggregate demand curve; right
Answer: B
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Assume that you purchased a $1,000 perpetual bond that pays a market interest rate of 5 percent. If you attempted to sell this bond today subsequent to an increased market rate of interest of 7.5 percent, then you
a. could only sell this bond at a capital loss. b. could sell this bond at a capital gain. c. would not be able to sell this bond. d. could exchange your bond yielding 5 percent for a bond yielding 7.5 percent on an even exchange basis.
If Fred's annual real income rises by 8 percent each year, his annual real income will double in about:
A. 8-9 years. B. 10-11 years. C. 5-6 years. D. 19-20 years.