? Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:
A. ?both the price level and real GDP.
B. ?real GDP without raising the price level.
C. ?the price level without affecting real GDP.
D. ?the price level but reduce real GDP.
Answer: A
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
The reserves of financial institutions:
a. Are made up mainly of government securities and high quality corporate bonds. b. Are assets that financial institutions try to maximize. c. Are assets that financial institution's try to keep at the legal limit. d. None of the above is correct. e. Are the largest liability in a financial institution's balance sheet.
Suppose Stephen's first novel makes the New York Times bestseller list. Regression to the mean implies that his second novel:
A. won't be as popular as his first novel. B. will be even more popular than his first novel. C. will have a similar plot to his first model. D. will be a complete flop.
When aggregate expenditure is given as Y = 400 + 0.5Y, short-run equilibrium output equals:
A. 400. B. 600. C. 1,200. D. 800.