If the price of inputs falls and the level of consumer indebtedness rises:
a. Price index rises, and the change in real GDP is uncertain.
b. Price index falls, and real GDP rises.
c. The change in price index is uncertain, and real GDP rises.
d. Price index falls, and real GDP falls.
e. Price index falls, and the change in real GDP is uncertain.
.E
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In an open economy, aggregate supply consists of domestic production
A. plus imports. B. plus exports. C. minus imports. D. minus exports.
Using the Taylor rule, if the current inflation rate exceeds the target inflation rate and real GDP exceeds potential GDP, then the federal funds target rate ________ the sum of the current inflation rate plus the real equilibrium federal funds rate
A) may be greater than or less than B) will be greater than C) will be the same as D) will be less than
Financing government spending with taxes
A) causes both reserves and the monetary base to rise. B) causes both reserves and the monetary base to decline. C) causes reserves to rise, but the monetary base to decline. D) has no net effect on the monetary base.
The Bertrand model of price setting assumes that a firm chooses its price
A) independently of what price other firms charge. B) subject to what price rival firms are charging. C) so that joint profits are maximized. D) without considering the shape of the demand curve.