In an economy where planned aggregate spending is given by PAE = 3,000 + .75Y ? 10,000r, the central bank is currently setting the interest rate at 0.05 (5 percent). If potential output equals 10,800, the central bank must ________ the interest rate to close the ________ gap.
A. raise; recessionary
B. raise; expansionary
C. lower; expansionary
D. lower; recessionary
Answer: D
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What will be an ideal response?
If a nation can produce a good or service at the lowest opportunity cost, then it
A) might export or import the good, depending on whether or not it has a comparative advantage in the production of the good. B) can sell the product at a lower price than other nations. C) will definitely import the good because it can beat other countries' prices. D) does not want to export the good because the low cost means it makes only a low profit. E) is best for the nation to not trade the good internationally.
A corporation is legally owned by its
a. chief executive officer. b. board of directors. c. bondholders. d. stockholders.
Eric, a resident of Sweden, purchases a book printed in the U.S. Which country's exports increase?
a. Sweden's b. the U.S.'s c. Sweden's and the U.S.'s d. neither Sweden's nor the U.S.'s