You have just read that Australia has suffered a drought, destroying its wheat crop for this year. The effect of this adverse supply shock on Australia would probably be
A) an increase in prices and an increase in real interest rates.
B) an increase in prices, an increase in nominal interest rates, but a decrease in real interest rates.
C) a decrease in prices and a decrease in real interest rates.
D) a decrease in prices, a decrease in nominal interest rates, but an increase in real interest rates.
A
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Monetary and fiscal policy making that is carried out in response to a pre-set rule and does not respond to changes in economic activity is known as
A) active policy making. B) discretionary policy making. C) nondiscretionary policy making. D) Keynesian policy making.
Which of the following is not an example of a compensating differential? Job A pays more than Job B because Job A requires
a. more international travel to dangerous locations. b. two night shifts per month. c. careful handling of toxic chemicals. d. an advanced degree.