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
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Elaine values the utility of her first cup of coffee at $1; a second cup, $.75; and a third cup, $.50. If Elaine drinks three cups of coffee for breakfast, her marginal utility is equal to
A. $.50, the value of her last cup of coffee. B. $1.00, the value of her first cup of coffee. C. marginal utility. D. $2.25. E. $1.50.
In the chapter you read that it costs the U.S. Treasury's Bureau of Engraving and Printing around 5-1/2 cents to print a $1 bill, 10-1/2 cents to print a $20 bill, and a bit over 14 cents to print a $100 bill. It seems the Treasury could generate a nice profit for the government by simply printing currency and using this currency to purchase the goods and services the government needs. In fact, this seems to be a way to eliminate the problem of budget deficits for the U.S. government. Comment on this idea.
What will be an ideal response?
Refer to the graphs shown. If the quantity demanded by consumers is the same for every price, then the demand curve would look like:
A. I. B. II. C. III. D. IV.
Which of the following statements about the Social Security (OASDI) program is FALSE?
A. When an insured worker dies, benefits continue for widows or other dependents. B. Benefits are based on need. C. Benefits are an intergenerational transfer program from those who work to those who don't work. D. Benefits are paid to individuals who would be financially secure in their absence.