1. The multiplier model assumes that the price level is: a. fixed. b. neither rigidly fixed...

1. The multiplier model assumes that the price level is:

a. fixed.

b. neither rigidly fixed nor perfectly flexible.

c. flexible in the short run but fixed in the long run.

d. perfectly flexible.

2. The multiplier model is designed to answer which one of the following questions?

a. What causes changes in aggregate expenditures?

b. How will output be affected by changes in aggregate expenditures?

c. How did the economy arrive at its current price and output level?

d. How will prices respond to changes in aggregate expenditures?

3. Expansionary monetary policy is always expected to increase:

a. nominal income but never real income.

b. real income but never nominal income.

c. nominal income.

d. real income.

4. Inflation occurs when the price level:

a. rises and then falls.

b. changes.

c. increases one year only.

d. increases continuously.

5. Inflation hurts:

a. everyone.

b. those whose incomes don't change.

c. those whose incomes can change.

d. no one.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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