The value of money rises as the price level
a. rises, because the number of dollars needed to buy a representative basket of goods rises.
b. rises, because the number of dollars needed to buy a representative basket of goods falls.
c. falls, because the number of dollars needed to buy a representative basket of goods rises.
d. falls, because the number of dollars needed to buy a representative basket of goods falls.
d
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The income effect of a wage increase will cause a worker to devote
A) more time to labor and less time to leisure. B) less time to labor and more time to leisure. C) more time to labor and more time to leisure. D) less time to labor and less time to leisure.
During a severe recession, appropriate economic policy might include
A. An open market purchase by the Fed, a decrease in the tax rates, or a decrease in the budget deficit. B. An open market purchase by the Fed, a decrease in the discount rate, or a decrease in government regulation. C. An open market sale by the Fed, a decrease in the discount rate, or an increase in the budget deficit. D. A decrease in government spending, a decrease in the discount rate, or a decrease in government regulation.