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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When fiscal policy makers wish to reduce aggregate demand, they could enact:
A. contractionary monetary policy. B. expansionary monetary policy. C. contractionary fiscal policy. D. expansionary fiscal policy.
Which of the following would be an example of passive policy making?
A) establishing a system of automatic tax stabilizers B) marginal rate tax cuts intended to increase real Gross Domestic Product (GDP) C) government spending decreases intended to decrease real Gross Domestic Product (GDP) D) none of the above
Which of the following would be counted as investment in the national income accounts?
a. the purchase of a newly issued stock b. the purchase of a newly built apartment house c. the purchase of a newly minted coin d. the payment of tuition at a private college
Tariffs discourage imports by making imported products more expensive to consumers
a. True b. False Indicate whether the statement is true or false