Answer:
Suppose a huge increase in credit card frauds leads to many businesses refusing to accept payments by credit cards. As a result, people want to keep more cash on hand, increasing the demand for money. Assume the Fed does not change the money supply. According to the theory of liquidity preference, the interest rate will __increase__ , which causes aggregate demand to__decrease_
If instead the Fed wants to stabilize aggregate demand, it should ___increase__ the money supply by _purchasing__ government bonds.
Explanation:
The economy's aggregate demand will increase as a result of the increased preference for liquidity leads to an increase in consumer spending, thereby increasing the Gross Domestic Product. If the Fed increases the money supply in response to the increased preference for liquidity, it will cause a reduction in interest rates, thereby further increasing consumer spending.
Answer: will increase if the quantity effect outweighs the price effect
Explanation:
A monopolist is an individual or a firm that controls all the market for a certain good or service in the market. A monopolist has so much power and usually doesn't improve their product as there are no alternatives.
An increase in output by monopolist will increase if the quantity effect outweighs the price effect.
Answer: Wages are flexible if the economy is self-regulating.
Explanation:
Classical economists believe that the economy is self-regulating. This means that if the economy is not at equilibrium, it will return to equilibrium if it is left without interference.
For this to happen, inputs such as wages have to flexible to enable them to adjust to market conditions and thus take the Economy back to equilibrium.
For instance, if there is a recession, wages will reduce so that the prices that the producers can charge will reduce as well which will enable supply to match demand and bring the economy back to equilibrium.
D,all of the above.. to be amixed economy it needs to have them all.
