A. The exchange-rate effect
B. The wealth effect
C. The classical dichotomy/monetary neutrality effect
D. The interest-rate effect
Related Mcqs:
- The Phillips curve is an extension of the model of aggregate supply and aggregate demand because, in the short run, an increase in aggregate demand increase price and ?
A. decreases unemployment
B. decrease growth
C. increases unemployment
D. decreases inflation - According to the interest rate effect aggregate demand slopes downward (negatively) because ?
A. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls
B. lower prices increase the value of money holding and consumer spending increases
C. lower prices decrease the value of money holdings and consumers spending decreases
D. lower prices reduce money holdings increase lending interest rates fall, and investment spending increase - According to the wealth effect aggregate demand slopes downward (negatively) because ?
A. lower prices increase the value of money holding and consumers spending increase
B. lower prices decrease the value of money holding and consumers spending decrease
C. lower prices reduce money holding increase lending, interest rates fall and investment spending increase
D. lower prices increase money holding decrease lending, interest rates rise and investment spending falls - For the Eurozone countries, the most important source of the downward slope of the aggregate demand curve is probably ?
A. The wealth effect
B. None of these answers
C. The exchange-rate effect
D. The fiscal effect
E. The interest-rate effect - Assuming a downward sloping demand curve and upward sloping supply curve a higher equilibrium price may be caused by ?
A. An fall in demand
B. An increase in supply
C. improvements in production technology
D. An increase in demand - Suppose that the demand curve for tin is highly inelastic. If the supply curve of tin decrease and increase cyclically along the demand curve for tin then in this market the size of the price fluctuation will be __________ the size of the quantity fluctuations?
A. relatively greater then
B. relatively less than
C. the same as
D. any of the above - Which of the following statements is true regarding the long-run aggregate supply curve? The long-run aggregate supply cruve ?
A. Is vertical because an equal change in all prices and wages leaves output unaffected
B. is positively sloped because price expectations and wages tend to be fixed is the long run
C. shifts right when the government raises the minimum wage
D. shifts left when the natural rate of unemployment falls - In the model of aggregate demand and aggregate supply, the initial impact of an increase in consumer optimism is to ?
A. shift the short-run aggregate supply curve to the left
B. shift the aggregate demand curve to the right
C. shift the short-run aggregate supply curve to the right
D. shift the aggregate demand curve to the left - Suppose the economy is initially in long run equilibrium Then suppose there is a drought that destroys much of the wheat crop if policymakers allow the economy to adjust to long-run equilibrium on its own, according to the model to aggregate demand and aggregate supply what happens to prices and output in the long run ?
A. Output rises; prices are unchanged from the initial value
B. Output and the price level are unchanged from their initial values
C. Output falls; prices are unchanged from the initial value
D. Prices fall; output is unchanged from its initial value - Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ?
A. Price fall; output rises
B. Price fall; output falls
C. Price rise; output fall
D. Price rise; output rise
