When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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When the price level is low, resulting in domestic goods being cheaper than imported foreign goods,
A) there will be a reduction in import tariffs. B) the demand for domestic goods will increase. C) consumers hold more money. D) consumers spend less.
An advantage to American banks from operating foreign branches is that Eurodollar deposits in offshore branches are
A) not subject to reserve requirements. B) insured by the FDIC. C) subject to extensive regulatory supervision. D) all demand deposits that pay no interest.
Some studies have found that saving is not very sensitive to the rate of return on saving
a. True b. False Indicate whether the statement is true or false
How long does it take for the Fed's actions to have their intended effect?
A. 6—18 months B. 19—24 months C. 25—36 months D. 0—5 months