If potential output equals 3,000 and short-run equilibrium output equals 3,500, there is a(n) ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. expansionary; raise
B. recessionary; reduce
C. recessionary; raise
D. recessionary; not change
Answer: A
You might also like to view...
A common resource is nonrival but excludable
Indicate whether the statement is true or false
If New Yorkers decrease their purchases of French champagne, assuming all else remains constant, this will ________ of the United States
A) increase the trade deficit B) decrease the current account balance C) increase the balance of trade D) decrease net exports E) increase the balance of payments
If the expansion of a country's exports leads to growth in non-export industries this is called a(n)
A) secondary effect. B) linkage effect. C) elementary effect. D) None of the above.
In regression analysis, the explanatory variables
A) are always price and income. B) are the variables whose variations are to be explained. C) are the factors that are thought to affect the dependent variable. D) are used to explain the random error term.