Suppose the economy is producing at the natural rate of output. A decrease in consumer and business confidence will cause ________ in real GDP in the short run and ________ in inflation in the short run, everything else held constant
A) an increase; an increase
B) a decrease; a decrease
C) no change; an increase
D) no change; a decrease
B
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Production efficiency implies that
A) joint profits are maximized. B) joint profits are minimized. C) joint profits are zero. D) joint profits can be increased.
The expected effects of a tighter monetary policy are
A. lower real interest rates. B. exchange rate depreciation. C. lower inflation. D. All of these responses are correct.
Suppose you own a savings bond that will pay you $100 in 7 years. If the annual interest rate is 2%, what is the present value of the savings bond?
a. $27.91 b. $87.06 c. $93.64 d. $87.06
One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired. B. prices tend to adjust more quickly downward than upward. C. wages are sticky downward. D. input prices increase with output prices.