When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline
B. increase; raise; decline
C. decline; lower; expand
D. decline; raise; decline
Answer: C
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Variable costs are
A. sunk costs. B. costs that change with the amount of output a firm produces. C. costs that change every day. D. the change in total cost associated with the production of an additional unit of output.
If the interest rate increases due to an increase in government purchases, the rise in real GDP will be greater than what would have occurred if the interest rate had remained stable
a. True b. False
Recall the Application about the salaries paid in Major League Baseball to answer the following question(s). Some Major League Baseball players are free agents, meaning they are free to negotiate a contract with any team. Other players are journeymen and apprentices, who are restricted to a single team.Recall the Application. What was the reason that rookies on the average are paid much less than their MRPs?
A. Their negotiations are restricted to only one team. B. Most of their salary goes to health insurance. C. They are terrible at negotiations. D. None of them are good players, so they are paid very little.
The real interest rate is the
A. nominal interest rate plus the anticipated inflation rate. B. nominal interest rate plus the anticipated interest rate. C. nominal interest rate minus the anticipated interest rate. D. nominal interest rate minus the anticipated inflation rate.