Based on the diagram, if potential output equals 5,000 and the real interest rate is 3 percent, then there is ________ gap and the Fed must ________ the real interest rate so that output will equal potential output. 
A. an expansionary; raise
B. no output; not change
C. a recessionary; raise
D. a recessionary; reduce
Answer: B
You might also like to view...
In monopolistic competition there
A) are many firms and many buyers. B) are several large firms. C) is one large firm. D) might be many, several, or one firm. E) are many firms but only a few buyers.
The quantity demanded for a duopolist's product is zero if ________
A) it charges a lower price than its rival B) it charges a higher price than its rival C) it charges the same price as its rival D) it can produce the product at a lower cost
Suppose that the Japanese yen appreciates significantly at some point, thus making Japanese imports more expensive. Japanese exporters may lower their profit margins to reduce the effect of the yen appreciation on U.S
importers, producing a phenomenon known as A) the J-curve. B) the absorption effect. C) pricing to market. D) international reserves compliance.
The mass use of credit cards began in 1958 with the BankAmericard. Its name changed in 1976 to
A) Visa B) Master Card C) Visa D) American Express