This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: A change in which of the following variables will have no direct effect on domestic demand? A) ... (Read 63 times)

tatyanajohnson

  • Hero Member
  • *****
  • Posts: 569
on: Jun 30, 2018
A change in which of the following variables will have no direct effect on domestic demand?
 
  A) domestic income
  B) foreign income
  C) government spending
  D) the interest rate (r)
  E) none of the above

Question 2

Explain how changes in the proportion of contracts that are indexed affect how a given change in monetary policy will affect economic activity.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

lorealeza

  • Sr. Member
  • ****
  • Posts: 345
Reply #1 on: Jun 30, 2018
Answer to Question 1

B

Answer to Question 2

An increase in nominal money growth will increase the real money supply causing an increase in economic activity. As the proportion of labor contracts that are indexed increases, the effects of changes in unemployment on inflation would increase. A reduction in u will cause an increase in inflation. When inflation rises in a period, some contracts (those that are indexed) will call for an immediate increase in wages further increasing inflation within that period. As indexation becomes more prevalent, that secondary effect on inflation will be magnified. This magnification of the inflation effect will cause the real money supply to increase by a smaller amount and, therefore, reduce the output effects of a given monetary expansion.


tatyanajohnson

  • Hero Member
  • *****
  • Posts: 569
Reply #2 on: Jun 30, 2018
Correct answers!


lorealeza

  • Sr. Member
  • ****
  • Posts: 345
Reply #3 on: Jun 30, 2018
Great! Please up vote :D


« previous next »
 

Did you know?

Blood is approximately twice as thick as water because of the cells and other components found in it.

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

Malaria was not eliminated in the United States until 1951. The term eliminated means that no new cases arise in a country for 3 years.

Did you know?

Children of people with alcoholism are more inclined to drink alcohol or use hard drugs. In fact, they are 400 times more likely to use hard drugs than those who do not have a family history of alcohol addiction.

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

Wild boar/domestic pig hybrid, displayed at Rothschild Museum, Tring, England Wild boar/domestic pig hybrid, displayed at Rothschild Museum, Tring, England
Apply direct pressure to the patient’s wound. Apply direct pressure to the patient’s wound.
A gasoline direct-injection system injects fuel under high pressure directly into the combustion ... A gasoline direct-injection system injects fuel under high pressure directly into the combustion ...
Flow cytometry. Cells expressing the surface markers CD4, CD8, and CD3 are labeled in a direct ... Flow cytometry. Cells expressing the surface markers CD4, CD8, and CD3 are labeled in a direct ...
Apply direct pressure under the zygomatic arch. Moving laterally, gently press up and under the ... Apply direct pressure under the zygomatic arch. Moving laterally, gently press up and under the ...
Suppose a country imports televisions. The country's supply and demand curves are shown in ... Suppose a country imports televisions. The country's supply and demand curves are shown in ...
Video: Pressure Flow Model Animation

For a complete list of videos, visit our video library