To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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If the marginal product of capital is greater than the rental cost of capital in terms of goods and services, then ________
A) the firm should continue to produce using that same amount of capital B) the firm should add additional capital C) the firm should reduce the amount of capital is using D) diminishing returns have been avoided
Which of the following is most likely to cause the dollar to depreciate?
a. higher domestic interest rates b. an increase in the rate of inflation abroad c. a shift by the Fed to a more expansionary monetary policy d. a decrease in foreign interest rates
Excess reserves are
A. Total reserves less required reserves. B. Total reserves less transactions account balances. C. Bank reserves in excess of vault cash. D. Required reserves less demand deposits.
What is the poverty threshold?
(A) The percentage of people who live in poverty. (B) The income needed to live in an inner city or rural area. (C) The income of the lowest 20 percent of families. (D) The income level below that which is needed to support a family.