A Core Belief of Modern Macroeconomics Is That in the Long

question 4

Multiple Choice

A core belief of modern macroeconomics is that in the long run:

• A) a change in money growth will affect the composition of output, but not its level.
• B) a change in money growth will affect the level of output, but not its composition.
• C) greater saving will result in greater output.
• D) a change in fiscal policy will not affect the composition of output.
• E) output can deviate permanently from its natural level.

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Definitions:

Rate of Inflation

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Purchasing Power

An individual's or entity's ability to buy goods and services, affected by inflation and personal financial situation.

Hourly Rate

The sum of money received or given out for every hour worked.

Toxic Waste Discharge

The release of harmful pollutants into the environment, usually from industrial operations.