If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is slow, then the
A) interest rate will fall.
B) interest rate will rise.
C) interest rate will initially fall but eventually climb above the initial level in response to an increase in money growth.
D) interest rate will initially rise but eventually fall below the initial level in response to an increase in money growth.
C
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Gordon believes that the expansion which began in 1982 did so because of the
A) expansionary monetary policy which was pursued. B) Reagan tax cuts, the passage of the Economic Recovery Act in 1981. C) increases in consumer and business firm optimism concerning future business conditions. D) A and B are both correct.
The more that firms in an economy believe that the demand for their goods is mainly influenced by "local conditions" and not the aggregate level of demand, the ________ is the SAS curve and thus the ________ are cycles in real GDP
A) steeper, larger B) steeper, smaller C) flatter, larger D) flatter, smaller