Suppose the Fed conducts an open market purchase of bonds. This monetary policy action will tend to cause
A. the price of bonds to decrease, and the interest rate to increase.
B. the price of bonds to increase, and the interest rate to increase.
C. the price of bonds to decrease, and the interest rate to decrease.
D. the price of bonds to increase, and the interest rate to decrease.
Answer: 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
Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
Increasing a tariff will ________ the domestic quantity consumed of the good, while ________ the domestic production of the good
A) increase; increasing B) increase; decreasing C) decrease; increasing D) decrease; decreasing
Revenue maximization occurs when a firm sells at a price
A) that is equal to its minimum average variable cost. B) where its marginal revenue is equal to its marginal cost. C) where its marginal revenue is zero. D) None of the above