To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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Refer to Figure 36.4 for the dollar-yen foreign exchange market. A decrease in demand from D1 to D2 could have been caused by
A. An increase in the number of Japanese visitors to the United States. B. A quota placed on Japanese television imports to the United States. C. A poor performance by the Japanese stock market compared to the U.S. stock market. D. A decrease in the demand for U.S. computers.
If the nominal interest rate is 10% and the rate of inflation is 7%, what is the real rate of interest?
A. 2.8% B. 10.3% C. 7.0% D. 3.0%
The price of one currency in terms of another is called an exchange rate
Indicate whether the statement is true or false
The costs associated with the negotiation and enforcement of an agreement are
A) property costs. B) resource factor costs. C) transaction costs. D) attorney fees.