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
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A commercial bank's reserves are equal to the amount of
A) the bank's loans. B) only the currency in its vault. C) currency in the bank's vault plus the balance on its reserve account at a Federal Reserve Bank. D) the bank's deposits. E) the bank's government securities.
The U.S. economy during the 2001-2004 period was been characterized by all of the following except
a. expansionary fiscal policy. b. expansionary monetary policy. c. a jobless recovery. d. moderate economic growth. e. none of the above
In the short run, if a firm shuts down, its total revenue is
a. $0 b. equal to its fixed costs c. greater than its variable costs d. greater than its fixed costs e. less than its variable costs
A positive statement is prescriptive—it prescribes what should be done
a. True b. False Indicate whether the statement is true or false