An inflationary gap exists when AD and SRAS
A) fail to intersect.
B) intersect to the right of Natural Real GDP.
C) intersect to the left of Natural Real GDP.
D) both have a positive slope.
B
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Currency substitution means
(a) use of money instead of barter. (b) use of countertrade instead of money. (c) use of foreign exchange instead of domestic currency. (d) all of the above. (e) none of the above.
If the economy is experiencing a recessionary gap and the government wants to accelerate the adjustment to the long-run equilibrium, it should
A. reduce aggregate demand by cutting government spending or raising taxes. B. increase aggregate demand by increasing government spending or cutting taxes. C. increase aggregate supply by increasing government spending or lowering taxes. D. increase aggregate supply by cutting government spending or raising taxes.
If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would
A. increase the price and decrease the quantity demanded. B. increase the price while not affecting the quantity demanded. C. would reduce the quantity demanded to zero no matter what the initial price. D. have no effect on either price or quantity demanded.
Control of the Federal Reserve is held by the __________.
Fill in the blank(s) with the appropriate word(s).