For a fixed target real interest rate and target inflation rate, when inflation increases, the Fed ________ interest rates, hence ________ short-run equilibrium output.
A. increases; decreasing
B. decreases; increasing
C. increases; increasing
D. decreases; decreasing
Answer: A
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The Keynesian view that demand could fall short of production is more likely to hold true if
a) wages and prices are fully flexible b) prices, but not wages, are full flexible c) wages and prices are not fully flexible d) wages, but not prices, are fully flexible
Refer to Figure 10.3. An increase in the real interest rate, with no other changes that affect aggregate expenditure, is best represented by ________ in panel (a) and ________ in panel (b)
A) a shift from AE2 to AE3; a shift from IS1 to IS2 B) a shift from AE3 to AE2; a shift from IS2 to IS1 C) a shift from AE2 to AE1; a movement from point B to point A D) a shift from AE3 to AE1; a movement from point C to point A
Which is NOT a weakness of the policy of mandatory separation of recyclables?
A) It actually pays people to use more recyclable material, and thus more material in total. B) It is costly for households in terms of time spent. C) It is costly for the government to monitor. D) Individuals may shift away from recyclable to non-recyclable materials just so they don't have to bother to separate them. E) Implementation is difficult and consumes household space.
A current account deficit is matched by a financial account surplus
a. True b. False Indicate whether the statement is true or false