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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Which of the following is generally not considered to be government regulation of the private sector:
a. price controls b. requiring a permit to do business c. laws that state the rights of parties to a contract dispute d. restrictions on how companies hire and fire labor e. all of the above are considered regulation
Which of the following will not increase when net taxes decrease?
a. Saving b. Disposable income c. Consumption d. Government expenditure e. GDP
What are the three economic uses of time?
a. Social work, nonmarket work, and leisure b. Nonmarket work, voluntary service, and leisure c. Acquiring skills, voluntary service, and social service d. Market work, nonmarket work, and leisure
Changing the reserve requirement is
A. Effective in changing excess reserves but not the money supply. B. A powerful tool that can cause abrupt changes in the money supply. C. The most often-used tool on the part of the Fed. D. A tool that has little impact on the money supply.