If policy makers do nothing in response to a recessionary gap, what will happen?
a. a rapid movement toward lower unemployment and higher inflation
b. a rapid movement toward lower unemployment and lower inflation
c. a slow movement toward lower unemployment and higher inflation
d. a slow movement toward lower unemployment and lower inflation
d
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In a circular flow model consisting of the household sector, the business sector, product markets, and resource markets:
a. Households are buyers of productive resources b. Businesses are sellers of products c. Resource markets are sellers of products d. Households are sellers of products
When Paul Volcker became Federal Reserve chairman in 1979
A. the rate of inflation was relatively low, and he managed to raise it to 12 percent. B. the rate of inflation was 12 percent, and he managed to reduce it, but doing so caused a recession. C. the rate of inflation was 12 percent, and he was not able to bring it down during his time as chairman. D. the rate of inflation was already low and stable, but his policies made it lower and more stable.
When supply and demand for a product increase simultaneously, we
A) can predict that both the market clearing price and the equilibrium quantity will increase. B) can predict that both the market clearing price and the equilibrium quantity will decrease. C) cannot predict the market clearing price, but know that the equilibrium quantity will increase. D) cannot predict the change in either the equilibrium quantity or the market clearing price.
Mechanism design can be used to provide employers and employees with the right incentives in labor markets.
Answer the following statement true (T) or false (F)