Assume that banks lend less. This leads to lower borrowing by people and households. As a...
Assume that banks lend less. This leads to lower borrowing by people and households. As a result they cut spending. What happens to the price level and real GDP in the short run?
A. both the price level and real GDP rise
B. the price level level falls and real GDP rises
C. the price level level rises and real GDP falls
D. both the price level and real GDP fall
Homework Answers
ANSWER ( D ) both the price level and real GDP fall .
this will happen because the cutting down of the government spending over the economy there will be the creation of the situation of recession in the market and due to the contraction in the government's spending leads to the reduction in the aggregate demand in the economy due to which there is fall in real GDP and reduction in the price level in the short run .
Add Answer to:
Assume that banks lend less. This leads to lower borrowing by
people and households. As a...
Suppose that banks are less able to raise funds and so lend less. Consequently, because people...
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time. If nominal wages are sticky, which of the following helps explains the change in output? a. real wages fall, so firms choose to produce less b. real wages fall, so firms produce more...
Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and...
Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Refer to Pessimism. In the short run what happens to the price level and real GDP? Group of answer choices Both the price level and real GDP fall. Both the price level and real GDP rise. The price level rises and real GDP falls....
At higher rates of interest households save less because it is more expensive to save. businesses...
At higher rates of interest households save less because it is more expensive to save. businesses demand more investment because there are more funds available to invest. households save more because they get a greater return on their savings. businesses demand more investment because future profitability is likely to be greater. According to Keynesian economics using the modern short-run aggregate supply curve, if there are unutilized resources in the economy and the aggregate demand decreases real GDP will fall and...
If aggregate demand shifts left, then in the short run Group of answer choices the price...
If aggregate demand shifts left, then in the short run Group of answer choices the price level and real GDP both rise. the price and real GDP both fall. the price level rises and real GDP falls. the price level falls and real GDP rises.
6. Which set of changes is definitely predicted to lower Real GDP in the short run?...
6. Which set of changes is definitely predicted to lower Real GDP in the short run? a. The money supply falls and labor productivity rises. b. The U.S. dollar appreciates and wage rates fall. c. The U.S. dollar depreciates and the government passes a law making it easier for entrepreneurs to make a profit. d. Foreign real national income falls and the economy experiences an adverse supply shock. 7. Which set of changes will definitely shift the aggregate demand (AD)...
1a) Suppose the banking system currently has $300 billion in reserves, the reserve requirement is 5...
1a) Suppose the banking system currently has $300 billion in reserves, the reserve requirement is 5 percent, and excess reserves are $30 billion. What is the level of loans? $5,400 billion $5,100 billion $270 billion b) When the Fed purchases $1000 worth of government bonds from the public, the US money supply eventually increases by less than $1000 exactly $1000 none of these are correct more than $1000 $6,000 billion c) If the aggregate demand curve shifts left, then in...
Starting from short-run equilibrium, the following occurs: personal income taxes rise and foreign real national income...
Starting from short-run equilibrium, the following occurs: personal income taxes rise and foreign real national income rises. What is the effect on the price level and Real GDP in the short run? a) The price level rises and Real GDP falls. b) The price level falls and Real GDP falls. c) The price level rises and Real GDP rises. d) The price level falls and Real GDP rises. e) There is not enough information to answer this question.
why the wage rates relate to price level? ro 38. The wage rate rises. As a...
why the wage rates relate to price level?
ro 38. The wage rate rises. As a result, in the short run Real GDP will and the price level will _ rise; rise fall; fall remain constant; fall fall; rise rise; fall o
The aggregate-demand curve O shows an inverse relation between the price level and the quantity of...
The aggregate-demand curve O shows an inverse relation between the price level and the quantity of all goods and services demanded. O has a slope that is explained in the same way as the slope of the demand curve for a particular product O is vertical in the long run. O All of the above are correct. Question 24 If aggregate demand shifts left, then in the short run the price level and real GDP both rise. O the price...
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of...
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of the following curves would this quota shift? a. supply of loanable funds left b. demand for loanable funds left c. demand for Canadian dollars right d. supply of Canadian dollars left 8. Suppose the Canadian government imposed import quotas on agricultural products. According to the foreign-currency exchange market diagram, which of the following outcomes would most likely result? a. Both the demand and supply curves...
6. Which set of changes is definitely predicted to lower Real GDP in the short run? a. The money supply falls and labor productivity rises. b. The U.S. dollar appreciates and wage rates fall. c. The U.S. dollar depreciates and the government passes a law making it easier for entrepreneurs to make a profit. d. Foreign real national income falls and the economy experiences an adverse supply shock. 7. Which set of changes will definitely shift the aggregate demand (AD)...
why the wage rates relate to price level?
ro 38. The wage rate rises. As a result, in the short run Real GDP will and the price level will _ rise; rise fall; fall remain constant; fall fall; rise rise; fall o
The aggregate-demand curve O shows an inverse relation between the price level and the quantity of all goods and services demanded. O has a slope that is explained in the same way as the slope of the demand curve for a particular product O is vertical in the long run. O All of the above are correct. Question 24 If aggregate demand shifts left, then in the short run the price level and real GDP both rise. O the price...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago