If potential output equals 3,000 and short-run equilibrium output equals 3,500, there is a(n) ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. expansionary; raise
B. recessionary; not change
C. recessionary reduce
D. recessionary; raise
Answer: A
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We would expect a decrease in taxes to cause a movement down along the short-run Phillips Curve.
Answer the following statement true (T) or false (F)
The inflation rate that is used to set the money wage rate and other money prices is the
A) actual inflation rate. B) cost of living inflation rate. C) natural inflation rate. D) expected inflation rate. E) wage inflation rate.
"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?
What will be an ideal response?
Refer to the data provided in Table 11.2 below to answer the following question(s). Table 11.2 
Refer to Table 11.2. When the interest rate ________, the farmer will engage in no investment.
A. is less than 15% B. is greater than 5% C. is less than 5% D. is greater than 15%