Starting from potential output, if firms become less optimistic about the future and decide to decrease their investment in new capital, then this will generate a(n) ________ gap and inflation will ________.
A. expansionary; decrease
B. recessionary; decrease
C. recessionary; increase
D. expansionary; increase
Answer: B
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Undervaluing of opportunity cost sometimes occurs because:
A. the opportunity cost is easy to visualize. B. the benefit is difficult to visualize. C. the opportunity cost is hard to visualize. D. opportunity cost is just theoretical.
The disruption caused by international trade is
a. fundamentally different from some of the other disruptions caused by the other workings of a market economy. b. not fundamentally different from all the other disruptions caused by the other workings of a market economy. c. fundamentally different from all the other disruptions caused by the other workings of a market economy. d. not fundamentally different from some of the other disruptions caused by the other workings of a market economy.
The Fed can influence the money supply by changing the interest rate it pays banks on the reserves they are holding
a. True b. False Indicate whether the statement is true or false
When considering her budget, the highest indifference curve that a consumer can reach is the
a. one that is tangent to the budget constraint. b. indifference curve farthest from the origin c. indifference curve that intersects the budget constraint in at least two places. d. None of the above is correct.