When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline
B. increase; raise; decline
C. decline; lower; expand
D. decline; raise; decline
Answer: C
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Indicate whether the statement is true or false
What happens as interest rates fall?
A) The number of profitable investment opportunities declines. B) The opportunity cost of using retained earnings to finance investment spending declines. C) Planned investment spending also falls. D) Planned investment spending remains constant since it depends on profit projections not interest rates.
A profit-maximizing monopolist produces an output level at which
a. marginal revenue is the greatest distance from marginal cost b. price is less than marginal cost c. the value to society of the last unit produced equals marginal cost d. marginal revenue equals marginal cost e. consumers wish to purchase less than what is produced because of high monopoly prices
Big Alice Ice Cream Parlor reduced its price of an ice cream cone from $1 to 90 cents. Sales consequently increased from 1,000 cones per week to 1,050 . The approximate price elasticity is
a. 0.20. b. 0.46. c. 2.16. d. 5.00.