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
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The classical view believes that ________
A) economies move slowly to their long run equilibrium levels B) a rise in the quantity of money leads to increases in saving and investment C) a rise in the quantity of money has no impact on economic activity D) all of the above E) none of the above
Which of the following will definitely cause the value of the misery index to increase?
A. Greater stagflation. B. A rightward shift of the aggregate supply curve. C. A leftward shift of the Phillips curve. D. A rightward shift of the aggregate demand curve.
If demand is elastic, then when price rises, total revenue will decrease.
Answer the following statement true (T) or false (F)
When externalities are present in a market, social surplus is maximized.
a. true b. false