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

Economics

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One of the potential upsides of contractionary fiscal policy is a reduction in

A. tax revenues. B. unemployment. C. output. D. payments on the national debt.

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Key features of the American labor market in the postwar period include all of the following except:

a. the growth of service sector employment. b. increased labor force participation rate of women with young children. c. steadily increasing union membership. d. the erosion of discriminatory barriers for women and minority members.

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If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?

a. $2.72 billion. b. $17 billion. c. $36.8 billion. d. $43 billion.

Economics

If the fluctuations in the economy’s real growth rate from year to year are caused primarily by variations in the rate at which aggregate demand increases, then data would show

A. a cyclical relationship between inflation and unemployment. B. a direct relationship between inflation and unemployment. C. an inverse relationship between inflation and unemployment. D. no relationship between inflation and unemployment.

Economics