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

Economics

You might also like to view...

The figure above shows the market for low-skilled labor in Midland city. The government sets a minimum wage at $6 per hour. With the minimum wage law enacted, the potential loss from job search in Midland city is

A) $60 million. B) $120 million. C) $40 million. D) zero.

Economics

Taco Bell produces both tacos and burritos because when it does so, Taco Bell experiences

A) economies of scope. B) decreasing scope of costs. C) increasing normal profit. D) economies of scale.

Economics

Which of the following describes how a negative externality affects a competitive market?

A) The externality causes a difference between the private cost of production and the private benefit from consumption. B) The externality causes consumer surplus to exceed producer surplus. C) The externality causes a difference between the private cost of production and the equilibrium price. D) The externality causes a difference between the private cost of production and the social cost.

Economics

Which of the following statements is false?

A) Price determination is the key element in any market system. B) Input prices influence a firm's costs of production. C) Output prices influence a firm's revenues. D) While managers must understand how output prices are determined, determination of input prices is irrelevant because it is beyond the manager's control.

Economics