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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"Pricing-to-market" is a business practice that was common in the twentieth century, but has now all but disappeared
Indicate whether the statement is true or false
In the new classical model, all wages and prices ________
A) are completely flexible with respect to expected changes in the price level B) are fixed with respect to expected changes in the price level C) are flexible with respect to the value of the dollar D) are fixed with respect to the money supply
If the Fed believes the economy is about to fall into recession, it should
A. Use an expansionary monetary policy to lower the interest rate and shift AD to the right B. Use an expansionary fiscal policy to increase the interest rate and shift AD to the right C. Use a contractionary monetary policy to lower the interest rate and shift AD to the right
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A. a change in society's preferences for hybrid cars versus motorcycles. B. an increase in economic growth. C. an increase in unemployment. D. a reduction in unemployment.