One complication in the process of reducing inflation by creating recessions is that the price level
A. adjusts more quickly to recessionary gaps than to inflationary gaps.
B. does not apply as it does in inflationary gaps.
C. always rises.
D. rarely falls.
Answer: D
You might also like to view...
In the market for health care, the price that consumers with health insurance pay is __________ the full cost of providing the health care service.
a. higher than b. lower than c. equal to
The amount of output lost when the inflation rate is reduced by one percentage point is called
A) Okun's law. B) the sacrifice ratio. C) the Solow residual. D) Planck's constant.
Which of the following combinations would produce conflicting effects on the supply of money? a. The Fed pays a higher interest rate on bank reserves and increases the required reserve ratio
b. The Fed conducts an open market purchase of government securities and raises the discount rate. c. The Fed pays a lower interest rate on bank reserves and conducts an open market purchase of government securities. d. All of the above would produce conflicting effects on the supply of money
When the growth rates of actual and potential GDP diverge, they usually diverge because
a. actual GDP growth equals potential GDP growth. b. actual GDP growth falls below potential GDP growth. c. potential GDP growth rates fall below actual GDP growth rates. d. potential GDP growth rates fluctuate while actual GDP growth rates remain stable.