When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline
B. increase; raise; decline
C. decline; lower; expand
D. decline; raise; decline
Answer: C
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The figure above shows the supply and demand curves for pizza. If the market is at its competitive equilibrium, what area in the graph above represents:
a. consumer surplus? b. producer surplus?
According to the "wealth effect," when the ________ falls, the ________ rises
A) price level; the real value of household wealth B) price level; the nominal value of household wealth C) inflation rate; nominal value of household assets D) unemployment rate; average level of household income
When the international financial system operated under the gold standard,
a. the currencies of most countries were convertible into gold b. all international transactions were financed with gold c. the price of gold was determined by the supply and demand for foreign exchange d. the quantity of money demanded was always the same e. there was very little inflation
The dissolving of the _____________ in 1991 resulted in a "peace dividend" for the United States that enabled us to divert tens of billions of dollars a year from military spending to much more productive uses.
Fill in the blank(s) with the appropriate word(s).