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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If the Fed increases interest rates, other things remaining the same, foreigners demand ________ dollars, thereby ________ the exchange rate
A) more; decreasing B) fewer; increasing C) the same number of; not affecting D) fewer; decreasing E) more; increasing
The proposition that if property rights exist and are enforced, then private transactions are efficient is referred to as the
A) Coase theorem. B) property rights theorem. C) pollution rights theorem. D) emission rights theorem. E) private-market efficiency theorem.
In the above figure, the indifference curves indicate that the two goods are
A) perfect complements. B) perfect substitutes. C) ordinary goods. D) normal goods.
At the point where actual inflation is equal to expected inflation,
A) the short-run Phillips curve intersects the long-run Phillips curve. B) the short-run Phillips curve is the same as the long-run Phillips curve. C) the unemployment rate is zero. D) there is no short-run Phillips curve, as this situation only occurs in the long run.