The main reason that many businesses fail when the price level is falling is that ________
A) deflation causes a decline in short-run aggregate supply
B) as prices fall, businesses are unable to predict the quantity of output they will be able to sell
C) the real value of the firms assets declines in proportion to the decrease in the price level
D) falling prices mean that regular loan payments become increasingly difficult
D
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Which of the following is NOT one of the functions of money?
A) protection from increases in prices of goods and services B) store of value C) medium of exchange D) unit of accounting
Classical growth theory predicts that increases in real GDP per person will
A) last because people make choices in the pursuit of higher profits. B) not last because higher income encourages smaller families and a lower population growth rate. C) not last because higher income leads to a population explosion. D) last because higher growth leads to new technology. E) last only if the government directs firms to make more investments in capital and new technology.