Suppose There Is a 5 Percent Increase in Nominal Demand

question 82

Multiple Choice

Suppose there is a 5 percent increase in nominal demand in every industry in an economy.Factors that keep the price level from also rising by 5 percent are called

• A)real rigidities.
• B)nominal rigidities.
• C)macroeconomic externalities.
• D)indexations.

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Definitions:

Non-interest-bearing

Referring to financial instruments or accounts that do not earn interest over time.

Compounded Quarterly

Calculating interest by adding previously earned interest to the principal amount at the end of every quarter, leading to an increase in the interest amount over periods.

Compounded Annually

Interest computed annually on the initial sum as well as on the interest accrued in past periods.

Professional Hockey

A sport involving two teams of skaters using sticks to shoot a puck into the opponent's net, played at a professional level.