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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The demand for most farm products is relatively inelastic. All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?
A) Farm revenues could increase or decrease depending on the cost of this new equipment. B) Farm revenues remain constant because consumers will not increase their consumption of farm products by much. C) Farm revenues increase. D) Farm revenues decrease.
Goods that are either collective consumption goods or nonexcludable goods or both combined cannot be produced by the market
a. True b. False
In the graph showing aggregate demand and aggregate supply after a positive supply shock, we can see that at Point B, ______ at Point A.
a. RGDP is higher than
b. RGDP is lower than
c. price levels are the same as
d. price levels are lower than
Which of the following examples would be most effective in the flat part of the SRAS demand curve?
a. The Fed begins an aggressive expansionary policy. b. The Fed keeps the monetary policy neutral. c. The Fed implements a slight contractionary policy. d. The Fed implements an aggressive contractionary policy.