Refer to Exhibit 15-5. At short-run equilibrium, this economy is in a(n) ___________________ gap. An economist who believes that the economy is self-regulating would assert that _____________________________.
a. inflationary; the SRAS curve will shift leftward sufficiently to close the inflationary gap
b. recessionary; the SRAS curve will shift rightward sufficiently to close the recessionary gap
c. inflationary; the AD curve will shift leftward sufficiently to close the inflationary gap
d. recessionary; the AD curve will shift rightward sufficiently to close the recessionary gap
Answer: a. inflationary; the SRAS curve will shift leftward sufficiently to close the inflationary gap
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If there is inflation and we compare the changes in a nominal variable over time versus its real counterpart, such as the nominal wage rate versus the real wage rate, we find that the
A) two increase at about the same rate because of inflation. B) real wage rate increases faster because of inflation. C) nominal wage rate increases faster because of inflation. D) two decrease at about the same rate because of inflation. E) two change at a rate that does not depend on the inflation rate.
During the Great Recession, securitization:
a. Was a major problem because it prohibited mortgage originators from reducing their underwriting mistakes by shifting them investors. b.Was one of the only sources of relief for investors who were suffering heavy losses on their mortgage investments. c. Was a major cause of the moral hazard problem. d. None of the above.
Refer to the graph shown. The equilibrium price for the monopolistically competitive firm represented is:
A. $6. B. $4. C. $10. D. $7.
Which of the following is NOT correct about required reserve ratio?
What will be an ideal response?