When the Federal Reserve increases its target rate of inflation, it will set a ________ real interest rate at every inflation rate and the aggregate demand curve will ________.
A. higher; shift to the right
B. lower; shift to the left
C. higher; shift to the left
D. lower; shift to the right
Answer: D
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Firms in a small economy anticipated that inventories would grow over the past year by $750,000, and over that year, inventories grew by exactly $750,000. This implies that
A) aggregate expenditure was greater than GDP that year. B) there was an unplanned decrease in inventories that year. C) there was an unplanned increase in inventories that year. D) aggregate expenditure and GDP were equal that year.
If the "Marginal Congestion Cost" for a public good is constant then the optimal number of users is infinite
a. True b. False
According to the Phillips curve analysis, if policy makers reduce aggregate demand growth, they can lower inflation, but only at the cost of a: a. permanent increase in the natural rate of unemployment. b. permanent increase in the actual unemployment rate
c. temporary increase in unemployment. d. temporary decrease in the natural level of unemployment.
If a U.S. dollar exchanges for 0.6 English pounds, the dollar price of a pound is
a. $0.60. b. $1.50. c. $1.67. d. $1.75.