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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Which of the following best describes the capture theory of regulation?
i. Regulation seeks an efficient use of resources. ii. Regulation is aimed at keeping prices as low as possible. iii. Regulation helps firms maximize economic profit. A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
Figure 5-8
In Figure 5-8, the consumer is indifferent between the combinations of beer and wine coolers indicated by points
A. A, C. B. B, D. C. C, B. D. A, B.
Suppose that the Fed undertakes an open market sale, selling $3 million worth of securities to a bank. If the required reserve ratio is 11%, checkable deposits (or the money supply), would _______________ by ________________ million, assuming that there are no cash leakages and that banks hold zero excess reserves
A) rise; $27 B) decline; $33 C) decline; $27 D) rise; $33
Suppose the government abolished the minimum wage law and the law that requires union wage rates to be paid on all government contract jobs. We would expect to see
A. a decline in the natural rate of unemployment. B. the duration of unemployment to increase. C. an increase in claims for unemployment benefits. D. a recession.