If policymakers attempt to offset a favorable inflation shock with monetary ________, the resulting long-run equilibrium will be at ________ inflation rate compared to allowing the self-correcting mechanism return the economy to potential output.
A. tightening; a lower
B. tightening; a higher
C. easing; a lower
D. easing; a higher
Answer: A
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Suppose the price of a soda is $2 each, the price of a hot dog is $3 each and the budget is $20. If the marginal utility of the fourth soda is 100 and the marginal utility of the fourth hot dog is 150, to maximize utility, a person will buy
A) 4 sodas and 4 hot dogs. B) more hotdogs than 4 and fewer sodas than 4 because hot dogs provide more utility. C) more sodas than 4 to increase their utility. D) fewer sodas than 4 and more hot dogs than 4.
If people who own cats tend to have fewer mice on their property, we can say there is a negative correlation between owning cats and having mice on your property.
Answer the following statement true (T) or false (F)
Describe the three major disadvantages of flexible exchange rates.
What will be an ideal response?
A horizontal line showing the current rate of inflation, as determined by past expectations and pricing decisions is called the:
A. short-run aggregate supply line. B. short-run equilibrium output line. C. aggregate demand curve. D. long-run aggregate supply line.