If an Improvement in the Quality of Education in the United

question 87

Multiple Choice

If an improvement in the quality of education in the United States increases the productivity of labor, this will

• A) increase aggregate demand and decrease aggregate supply.
• B) increase short-run aggregate supply and reduce aggregate demand.
• C) decrease aggregate demand and increase short-run aggregate supply.
• D) increase both long-run and short-run aggregate supply.

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Definitions:

Fisher Effect

An economic theory stating that the real interest rate is independent of monetary measures, especially the nominal interest rate and the expected inflation rate.

Canada Plus Call

Call provision that compensates bond investors for interest differential, making it unattractive for an issuer to call a bond.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock certificate, representing its official worth.

Par Value

The nominal value or face value given to a security or bond by the issuer.