For any given growth rate of aggregate supply, a faster growth rate of aggregate demand will lead to more inflation and faster growth of real output.
Answer the following statement true (T) or false (F)
True
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
If the rate of return is lower than the cost of borrowing the:
A. investor will lose money on net after paying back the loan. B. investor should take out the loan. C. borrower will make money by taking out the loan. D. savers will lose out by taking a loan.
An inflationary gap will exist when the full employment level of GDP is
a. equal to equilibrium GDP. b. greater than equilibrium GDP. c. less than equilibrium GDP. d. greater than disposable income.
For a perfectly competitive firm, marginal revenue product is equal to:
a. the difference between marginal revenue and marginal cost. b. the product price multiplied by total output. c. the change in total product arising from a unit change in resource usage. d. marginal product multiplied by product price.