To close a recessionary gap, the Fed ________ interest rates which ________ aggregate spending and ________ short-run equilibrium output.
A. reduces; increases; decreases
B. raises; decreases; increases
C. raises; decreases; decreases
D. reduces; increases; increases
Answer: D
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Whenever marginal cost is positive, average cost curves are upward sloping.
Answer the following statement true (T) or false (F)
Why may investors buy a Treasury bill with a negative real interest rate?
A) fear of rising inflation B) concern about high yields on other bonds C) fear of default by the U.S. government D) concern about the high default risk of alternative investments
If a firm sells 10 units of output at $100 per unit and 11 units of output when price is reduced to $99, its marginal revenue for the last unit sold is
A) $11. B) $99. C) $109. D) $89.
At high levels of interest, borrowers will borrow ____ and suppliers will supply ____.
A. more; less B. less; more C. less; less D. more; more