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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When a country imposes a per-unit (ad-valorem) tariff on an imported good or service then, the price that domestic consumers pay for the import falls
Indicate whether the statement is true or false
A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 ? Q. Suppose fixed costs rise to $400. What happens in the market?
A. The firm will reduce its output and raise price. B. The firm continues to produce the same output and charge the same price. C. The firm will raise the price. D. The firm will shut down immediately.
The ceteris paribus assumption means
A. from many, one. B. other things are equal. C. favors are returned in kind. D. this is the proof of the matter.
If m equals the maximum number of new dollars that can be created for a single dollar of excess reserves and R equals the required reserve ratio, then for the banking system:
A. m = R - 1. B. R = m/1. C. R = m - 1. D. m = 1/R.