The following diagram shows the rate of inflation each year during a five year span. Use this diagram to answer the next question.In which year did prices go down?

A. Year 1
B. Year 2
C. Year 3
D. Year 4


Answer: C

Economics

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Output in the goods and services market will be sustained into the future

a. if aggregate demand and short-run aggregate supply are in balance. b. only when the prior choices of decision makers were based on a correct anticipation of prices. c. only when prices are rising. d. only when wage rates are declining.

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What does it mean for the Fed to be the "lender of last resort?"

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Which of the following will increase the money supply?

A) an increase in the discount rate (relative to the federal funds rate) B) a decrease in the required reserve ratio C) an open market sale by the Fed D) a and c E) b and c

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Given the strict quantity theory of money, if the quantity of money doubled, prices would:

A. fall by half. B. double. C. remain constant. D. increase somewhat but less than double.

Economics