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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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%
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Answer the following statement true (T) or false (F)
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