Suppose aggregate demand is too high to bring about the Natural Real GDP level. A Keynesian policy prescription would call for a(n) _____________________ to close this inflationary gap
A) increase in government spending
B) decrease in government spending
C) increase in taxes
D) decrease in taxes
E) b or c
E
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A perfectly competitive firm will produce at an economic loss in the short run rather than discontinue production if there is a rate of output at which
a. marginal revenue equals marginal cost b. total revenue equals total cost c. total revenue exceeds total cost d. total revenue exceeds total fixed cost e. total revenue exceeds total variable cost
A federal policy that leads to an increase in aggregate supply is likely to result in: a. lower levels of employment
b. an increase in aggregate demand. c. a higher price level. d. lower levels of real GDP. e. an economic expansion.
Which statement is true?
A. Open market operations are seldom conducted any more. B. The basic way the Fed controls the money supply is by manipulating the discount rate. C. During periods of severe recession, the Fed tries to push up interest rates. D. During periods of severe inflation, the Fed tries to push up interest rates.
The ongoing search by savers for high returns leads the bond and stock markets to direct funds to the uses that appear:
A. least likely to be productive. B. to have no risk. C. most likely to be productive. D. to have the least risk.