The economy moves up a stationary aggregate demand curve when the Fed:
A. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
B. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function.
C. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function.
D. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
Answer: D
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If aggregate expenditure in an economy equals 1,000 + 0.9Y and full employment real GDP equals 9,000, then this economy has
A. an inflationary gap. B. no output gap. C. a recessionary gap. D. no autonomous expenditure.
Which of the following are depository institutions?
A) The Federal Reserve Banks of New York and Chicago B) The U.S. Treasury and the IRS C) Banks and thrifts D) Investment banks and finance companies
A price floor that is set above the equilibrium price
A) causes suppliers to lower their prices. B) is binding. C) is non-binding. D) creates a shortage.
Who gains and who loses from rent controls?
What will be an ideal response?