In the Medium Run, If Government Purchases Are Decreased and Nominal

question 40

Multiple Choice

In the medium run, if government purchases are decreased and nominal money supply is increased, then we can expect that

• A)aggregate demand will decrease and aggregate supply will increase, leaving the level of output the same
• B)output, prices, and interest rates will all increase
• C)output and prices will decrease, while interest rates will increase
• D)interest rates will decrease, while output and prices may increase, decrease, or remain the same
• E)none of the above

Acknowledge the factors beyond education and experience that contribute to wage determination.

Understand the concept of efficiency wages and their effects on labor market outcomes.

Recognize the economic reasons behind high incomes of superstars.

Analyze the impact of physical attractiveness on earnings from an economic perspective.

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Definitions:

Unearned Revenues

Money received by a company for services or goods yet to be delivered or provided, considered a liability until the transaction is completed.

Dividends Account

An account used to record the payments made by a company to its shareholders out of its profits.

Asset Account

An account on a balance sheet that represents the value of all assets owned by an entity.