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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What happens typically to a budget deficit during a recession?
A. It increases because of tax changes. B. It decreases because of spending decreases. C. It decreases automatically. D. It increases automatically.
The "bubble concept," which is sometimes used by EPA in its pollution control programs, is designed to
A) capture pollutants and dispose of them safely. B) confine pollution within a narrow area. C) make the people who pollute the most the ones financially responsible for pollution control. D) reduce the cost of achieving pollution-reduction targets. E) restore control over the environment to state and local governments.
The historical record for the United States for the past 100 years shows
A) growth in real GDP per person during most years. B) economic growth for about half the years and economic decline for the other half. C) growth until 1970 and then a period of constant per person real GDP. D) continuous economic growth, although at different rates, throughout the entire century.
Which of the following instruments is NOT traded in a money market?
A) residential mortgages B) U.S. Treasury Bills C) negotiable bank certificates of deposit D) commercial paper