If the public has correct rational expectations and the Fed reduces both reserve requirements and the discount rate, it would be expected to result in:
a. a higher level of real output and a lower price level.
b. a lower price level but no change in real output
c. a higher price level and a reduced level of real output.
d. a higher price level but no change in real output.
d
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
If real GDP for 2009 is $6400 billion and nominal GDP for 2010 is $6720 billion (in 2010 dollars), then the growth rate of real GDP is
A) 0%. B) 0.5%. C) 5%. D) unknown based on the given information.
In the above figure, along which range would the demand for this good be most elastic?
A) between point a and point b B) between point c and point d C) between point d and point e D) at point e
Regulation of industry is usually carried out by special government agencies that administer and interpret the law.
Answer the following statement true (T) or false (F)