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
Answer: B
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Answer the following statement(s) true (T) or false (F)
1. Market demand for a private good is found by vertically summing individual demands. 2. The supply curve is positively sloped because marginal cost (MC) rises with output (Q). 3. If QS = –10 + ½ P, the slope of supply, when conventionally graphed, is +½ . 4. Equilibrium price is the price level at which QD equals QS. 5. If the price level is such that quantity supplied exceeds quantity demanded, there is excess demand, or a shortage in the market.
If the Fed purchases government securities in the open market, _____
a. the money supply will decrease b. the money supply will increase only if the seller of those securities is a commercial bank c. the money demand will increase immediately d. the money demand will decrease immediately e. the money supply will increase through the commercial banking system regardless of who the seller is
A competitive firm maximizes its profit by producing output up to the point at which price is equal to ______
Fill in the blank(s) with correct word
The following list contains factors that are related to the aggregate demand curve.1)Household expectations 2)Profit expectations 3)Degree of excess capacity 4)Personal income tax rates 5)Exchange rates 6)National income abroad 7)Government spending 8)Household wealth Changes in which three of the above factors would most likely cause a change in consumer spending?
A. 1, 2, and 6 B. 3, 5, and 7 C. 1, 4, and 8 D. 5, 6, and 7