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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Comparative advantage is determined by
a. the amount of resources needed to produce a good b. the money cost of producing any good c. the opportunity cost of producing any good d. absolute advantage and production possibilities combined e. the level of demand for a good
Components of economic growth are:
a. physical capital, human capital, and technology. b. physical capital, human capital, and savings. c. education, physical capital, and technology. d. physical capital, working capital, and technology.
A positive externality
a. causes the product to be overproduced. b. provides an additional benefit to market participants. c. benefits consumers because it results in a lower equilibrium price. d. is a benefit to a market bystander.
The law of supply indicates that:
A. producers will offer more of a product at low prices than they will at high prices. B. consumers will purchase less of a good at high prices than they will at low prices. C. the product supply curve is downsloping. D. producers will offer more of a product at high prices than they will at low prices.