If potential output is less than actual output, eventually the short-run aggregate supply curve will shift:
A. down and eliminate the recessionary gap.
B. up and eliminate the recessionary gap.
C. down and eliminate the inflationary gap.
D. up and eliminate the inflationary gap.
Answer: D
You might also like to view...
The FOMC meets approximately eight times per year and at these meetings they
a. set a target federal funds interest rate. b. set a target money supply. c. set a target employment target. d. All of the above e. None of the above
Local banks could pass the risk involved in holding mortgage debts on to an investor with a higher risk tolerance using:
A. mortgage-backed securities. B. leveraged securities. C. leveraged investments. D. government-backed securities.
Answer the following statements true (T) or false (F)
1) Excess reserves are the amount by which required reserves exceed actual reserves. 2) Actual reserves equal required reserves plus excess reserves. 3) Commercial bank reserves are an asset to commercial banks but a liability to the Federal Reserve Bank holding them. 4) Balance sheets always balance because reserves must always equal liabilities plus net worth.
You use $5,000 of your own money to start a dog-walking business. During the first year you earn a 5% return on your investment. If the current interest rate on savings is 8%, you earn an economic profit of
A. -$150. B. $150. C. $250. D. $400.