Refer to the graph shown. In the graph, an inflationary gap exists if the price level is:
A. P0 and the aggregate demand curve is AD0.
B. P1 and the aggregate demand curve is AD0.
C. P1 and the aggregate demand curve is AD1.
D. P0 and the aggregate demand curve is AD1.
Answer: D
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When reserve requirements are increased, the:
a. excess reserves of commercial banks will decrease. b. excess reserves of commercial banks will increase. c. U.S. Treasury will have to borrow additional funds. d. money supply will rise.
A nation can forecast the following year's deficit without knowing how fast GDP will grow.
Answer the following statement true (T) or false (F)
At the point where the demand and supply curves intersect:
A. the market is in disequilibrium. B. there is neither a surplus nor a shortage of the product. C. the buying and selling decisions of consumers and producers are inconsistent with one another. D. quantity demanded exceeds quantity supplied.
As new goods and services become available the basket of goods used to calculate the CPI:
A. immediately changes to reflect them. B. never changes to reflect them. C. doesn't change until 75 percent of urban consumers use them. D. periodically is updated in order to reflect the changes.