When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline
B. increase; raise; decline
C. decline; lower; expand
D. decline; raise; decline
Answer: C
You might also like to view...
Refer to Table 10-1. Using the table above, what is the approximate growth rate of real GDP from 2015 to 2016?
A) 1% B) 2% C) 3% D) 4%
Which of the following would not cause the supply curve for gasoline to shift?
A) A change in the wages paid to gas station attendants. B) A change in the number of gas stations. C) A change in the incomes of drivers. D) A change in the cost of refining oil.
A resource price taker's resource demand curve is
a. horizontal b. the same as its marginal resource cost curve c. the same as its marginal revenue product curve d. the same as its marginal product curve e. the same as its average variable cost curve
Because smoking causes illness and disability to smokers, society must maintain more health-service capacity than it would need in the absence of smoking. Since the cost of maintaining this capacity is covered to a substantial degree by health insurance, even nonsmokers must pay higher premiums. Also, smokers hurt nonsmokers as a result of “passive smoke.” The Rand Corporation estimates these costs to be 29 cents per pack of cigarettes. Cigarette taxes average 37 cents per pack. Based on the economist’s definition of efficiency, it follows that
A. cigarette taxes are too high, and cigarette production is lower than the efficient amount. B. cigarette taxes should be increased until external costs are zero. C. since the tax exceeds the marginal cost, we have a better than efficient outcome. D. we are overconsuming cigarettes.