If the aggregate demand curve shifts to the right, people are willing to buy more _____ at every price level.
Fill in the blank(s) with the appropriate word(s).
real output
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To close a recessionary gap, the Federal Reserve must ________ real interest rates by ________ the money supply.
A. increase; decreasing B. decrease; increasing C. increase; increasing D. decrease; decreasing
The suggestion that the Fed concentrate only on reducing inflation is an attempt to
A. stabilize the level of unemployment and inflation. B. shift the long-run Phillips curve to the right. C. improve the efficiency of the self-correcting mechanism. D. simplify demand management by focusing on only one goal.
To promote economic efficiency, government should
a. keep all prices as low as possible. b. keep all prices high so that people will save more money. c. allow the market to set low prices for abundant goods and high prices for scarce goods. d. never interfere with firms' price setting powers.
Another term for the equilibrium price is
A. black market. B. ceteris paribus. C. market clearing price. D. law of demand.