When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline
B. increase; raise; decline
C. decline; lower; expand
D. decline; raise; decline
Answer: C
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Suppose the economy has a recessionary ga
A) raise real GDP without increasing the price level. B) raise real GDP and the price level. C) raise the price level alone, but cannot increase real GDP. D) raise real GDP and decrease the price level.
Does the short-run Phillips curve have a positive or negative slope? Explain how this slope is derived
What will be an ideal response?
In comparing the Cournot equilibrium with the competitive equilibrium,
A) both profit and output level are higher in Cournot. B) both profit and output level are higher in the competitive equilibrium. C) profit is higher, and output level is lower in the competitive equilibrium. D) profit is higher, and output level is lower in Cournot.
Natural monopolies result from the peculiar relationship between
a. government regulation and the ownership of scarce resources b. threats to potential entrants and the price of the product c. the size of market demand and the firm's cost structure d. product differentiation and the ownership of patents e. the firm's advertising campaigns and its labor policies