When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
You might also like to view...
The price of crude oil rose to over $100 per barrel in early 2013. What would we expect to see happen to the supply of plastic, which is produced using crude oil?
A) The supply of plastic will increase. B) The supply of plastic will decrease. C) The supply of plastic will stay the same because the government requires plastic producers to meet statutory minimum production levels. D) The supply of plastic will stay the same because of the profit motives of plastic producers.
Which of the following is true if marginal costs increase at a slow rate as output increases? a. The short-run aggregate supply curve is relatively steep. b. The short-run aggregate supply curve becomes vertical
c. The short-run aggregate supply curve is relatively flat. d. The long-run aggregate supply curve becomes horizontal. e. The long-run aggregate supply curve becomes downward sloping.
How does the phenomenon of diminishing returns to capital explain the catch-up effect?
A loan is:
A. a payment made periodically to all shareholders of a company. B. a promise by the bond issuer to repay the loan, at a specified maturity date, and to pay periodic interest at a specific percentage rate. C. an agreement in which a lender gives money to a borrower in exchange for a promise to repay the amount loaned plus an agreed-upon amount of interest. D. a financial asset that represents partial ownership of a company.