1. When the price level rises, the number of dollars needed to buy a representative basket of goods a. increases, so the

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1 When The Price Level Rises The Number Of Dollars Needed To Buy A Representative Basket Of Goods A Increases So The 1 (45.2 KiB) Viewed 37 times

1. When the price level rises, the number of dollars needed to buy a representative basket of goods a. increases, so the value of money rises. b. decreases, so the value of money rises. c. increases, and so the value of money falls. d. decreases, so the value of money falls. 2. Which of the following is an example of menu costs? a. Decreased savings b. Advertising new prices c. Reduced money holdings d. Wrong consumption decisions 3. According to the classical dichotomy, which of the following increases when the money supply increases? a. The real interest rate b. The real GDP c. The real wage d. The nominal wage 4. The nominal interest rate is 5 percent and the inflation rate is 2 percent. What is the real interest rate? a. 7 percent b. 0.30 percent c. -3 percent d. 3 percent 5. The principle of monetary neutrality implies that an increase in the money supply will increase a. real GDP and the price level. b. real GDP, but not the price level. c. the price level, but not real GDP d. neither the price level nor real GDP. 6. Net exports of a country are the value of a. goods and services imported minus the value of goods and services exported. b.goods and services exported minus the value of goods and services imported. c. goods exported minus the value of goods imported. d. goods imported minus the value of goods exported. Page