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
You might also like to view...
Consumers make all economic decisions in a mixed economy
Indicate whether the statement is true or false
For most consumer goods, the price elasticity of demand is
A) negative only when price decreases. B) negative regardless of the direction of the price change. C) positive only when price decreases. D) positive regardless of the direction of the price change.
A perfectly competitive firm's short-run supply curve is the:
a. segment of the marginal cost curve above average fixed cost. b. segment of the marginal cost curve above the minimum level of average variable cost. c. upward-sloping segment of the marginal cost curve. d. both a and b.
Consumption depends on:
A. total income. B. disposable income. C. pre-tax income. D. Consumption is unrelated to income.