Starting from short-run equilibrium, the following occurs: individuals expect higher (future) incomes and wage rates rise. What is the effect on the price level and Real GDP in the short run?
A) The price level rises and Real GDP rises.
B) The price level falls and Real GDP falls.
C) The price level rises, but the effect on Real GDP cannot be determined.
D) Real GDP rises, but the effect on the price level cannot be determined.
E) Real GDP falls, but the effect on the price level cannot be determined.
C
You might also like to view...
In general, the current stock of pollutants (St) may be modeled as St = Et + (1 - d)St-1 where d is the ________ and Et is the ________
A) social discount rate, previous stock level B) social discount rate, current emissions C) stock dissipation rate, previous stock level D) stock dissipation rate, current emissions
Assume that Abby, Ben, and Clara are the only citizens in a community. A proposed public good has a total cost of $1000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $400 each to Abby, Ben, and Clara. Based on economic analysis, the public good should:
A. Be produced, because the benefits are greater than the costs B. Not be produced, because the costs are greater than the benefits C. Be put to a vote, and produced only if voters approve it D. Not be produced, even if voters vote in favor of it