When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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A downward sloping income-demand curve indicates that the good is a necessity.
Answer the following statement true (T) or false (F)
List and briefly describe the three key reasons for income inequality in a market-based economy.
What will be an ideal response?
If tourists are charged a much higher price than the natives of a country for exactly the same item, what kind of pricing is involved?
A. Competitive pricing. B. MC = MR pricing. C. Monopoly pricing. D. Price discrimination.
Which of the following statement(s) best describes trade-offs?
a. The trade-offs in many production possibilities frontiers are represented by a straight line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to diminish. b. The trade-offs in many production possibilities frontiers are represented by a curved line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to increase. c. The trade-offs in many production possibilities frontiers are represented by a straight line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to increase. d. The trade-offs in many production possibilities frontiers are represented by a curved line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to diminish.