Holding constant risk and the real returns available abroad, higher domestic real interest rates ________ capital inflows, ________ capital outflows, and ________ net capital inflows.
A. increase; increase; decrease
B. decrease; decrease; decrease
C. increase; decrease; increase
D. increase; increase; increase
Answer: C
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
In the figure above, when 4,000 pizzas are produced, the marginal benefit of a pizza ________ its marginal cost, which means ________ pizza is being produced
A) exceeds; too little B) exceeds; too much C) is below; too much D) is below; too little E) equals; the efficient quantity of
Reductions in inflation have no cost in terms of lower output in ________
A) traditional Keynesian theory B) new Keynesian theory C) real business cycle theory D) traditional and new Keynesian theory
If business cycles are caused by changes in aggregate supply, you would expect to see
a. prices and unemployment moving in the same direction. b. price and unemployment moving in opposite directions. c. prices not moving with unemployment. d. unemployment is not included in the Keynesian model.