When actual investment is less than planned investment:
A. the quantity of output sold is the amount the firm expected to sell.
B. firms have sold less output than expected.
C. the economy produces short-run equilibrium output.
D. firms have sold more output than expected.
Answer: D
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
What are the three books to which the FOMC has access and what information is included in each?
What will be an ideal response?
If the Federal Open Market Committee decides to expand the money supply, then it will
A. raise the discount rate to member banks. B. issue directions to purchase government securities, thus putting more reserves in member banks. C. issue directions to sell government securities, thus taking reserves from member banks. D. order new Federal Reserve notes delivered to member banks.
The LM curve illustrates all combinations of domestic output levels and interest rates for which
A. the domestic money market is in equilibrium. B. there is a zero balance for the country's official settlements balance. C. there is full employment. D. the domestic product market is in equilibrium.