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
You might also like to view...
If the Herfindahl-Hirschman index (HHI) among the firms in the long distance telecommunications market were equal to 1755, when would the Federal Trade Commission probably challenge a proposed merger between any two of the firms?
A) It would challenge if the HHI would increase by more than 50 points. B) It would challenge if the HHI would increase by more than 100 points. C) It would challenge no matter what happened to the HHI because the market has so few firms. D) It would not challenge because the HHI is less than 1800.
To offset the effect of households and firms deciding to hold more of their money in checking account deposits and less in currency, the Federal Reserve could
A) raise government spending. B) sell Treasury securities. C) raise bank taxes. D) lower the required reserve ratio.
If the quantity output and average cost at that output level are known, then it is possible to determine marginal cost for that output level.
Answer the following statement true (T) or false (F)
According to the monetarist view, the aggregate supply curve is:
A. Horizontal until full employment is reached and then it becomes vertical. B. Horizontal at all levels of output. C. Vertical at the natural rate of unemployment. D. First horizontal, then upward sloping, and finally vertical.