Use the long-run model presented in Chapter 22 to answer this question. If there is a decrease in aggregate demand, and monetary policymakers counter the decrease in aggregate demand, what will be the impact on output and inflation? Explain.
What will be an ideal response?
If monetary policymakers counter demand increase, the output gap may be avoided and the policymakers can preserve their inflation target.
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Which of the following is true?
A) When real GDP equals potential GDP, both equal nominal GDP. B) Nominal GDP fluctuates around real GDP. C) Real GDP fluctuates around nominal GDP. D) Potential GDP fluctuates around real GDP. E) Real GDP fluctuates around potential GDP.
The terms of trade refers to
A) the ratio at which a country can trade its exports for imports from other countries. B) the role of the government in overseeing international trade. C) the rules and regulations that countries must adhere to when trading. D) a legal document that specifies the trade quantities agreed to by two countries.
The strongest political pressure for a trade policy that results in higher protectionism comes from
A) domestic workers lobbying for import restrictions. B) domestic workers lobbying for export restrictions. C) domestic workers lobbying for free trade. D) domestic consumers lobbying for export restrictions. E) domestic consumers lobbying for import restrictions.
Doctors demand large salaries in part because
A. they are forbidden by U.S. law from receiving economic rent. B. most doctors have backward-bending labor supply curves. C. they participate in the secondary labor market. D. they have made significant investments in human capital.