An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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Last year, Jack's income was $15,000 and he bought 50 bags of potato chips. This year his income is $18,000 and he buys 55 bags of potato chips. Therefore, Jack's
A) income elasticity of demand for potato chips is 0.52. B) price elasticity of demand for potato chips is 0.52. C) income elasticity of demand for potato chips is 1.66. D) price elasticity of demand for potato chips is 1.66.
Which of the following does NOT affect the position of the DD curve?
A) monetary policy B) government spending C) taxes D) export demand E) price levels
A reverse repurchase agreement will accomplish all of the following to banks and other financial intermediaries EXCEPT:
A. discourage investment elsewhere. B. ensure their solvency. C. give them a higher rate of return on T-Bill holdings. D. drain them of liquid cash.
If the price level is fixed, changes in nominal income and changes in real income ______.
a. have an inverse relationship because there are no changes in aggregate supply. b. remain equal because there is no rate of inflation to account for. c. remain equal because aggregate income will neither rise nor fall. d. have an inverse relationship because full employment has been reached.