Answer each of the following questions assuming the economy is experiencing a negative output gap.
a. Is Inflation decreasing, increasing, or stable?
b. Is actual output greater than or less than potential output?
c. Is unemployment rising or falling?
d. Is the Federal Reserve more likely to pursue expansionary or contractionary monetary policy?
e. Is the economy likely experiencing an expansion or contradiction?
a. decreasing
b. less
c. rising
d. expansionary
e. contradiction
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When the coupon rate on newly issued bonds ________ relative to older, outstanding bonds, the market price of the older bond ________
A) decreases; rises in the secondary market B) increases; falls in the primary market C) decreases; falls in the secondary market D) increases; falls in the secondary market
A drop in Durable Goods Orders should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
Marginal profit is the profit
A. earned by a firm that is about to go out of business. B. calculated directly from the total cost curve. C. that is added by a one-unit increase in total output. D. earned for each dollar of cost increase.
When you stuff dollar bills under your mattress, knowing that they will be there next year to help buy your next major purchase, money is serving which function?
A. Store of wealth B. Unit of account C. Medium of exchange D. Store of real assets