The nature of demand indicates that as the price of a good increases:
Answer: Buyers desire to purchase less of it
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The aggregate demand curve shows
A) a direct relationship between changes in the price level and changes in real GDP. B) real GDP does not change as the price level changes. C) an inverse relationship between the price level and real GDP. D) an inverse relationship between changes in the price level and changes in nominal GDP.
If on-the-job working conditions have improved over time,
a. real GDP will understate the growth rate of real income. b. real GDP will overstate the growth rate of real income. c. the GDP deflator will overestimate inflation. d. real GDP will overstate the growth rate of real income, and the GDP deflator will understate inflation.
All of the following statements about open market operations are true EXCEPT:
A) They are used by the Federal Reserve to change the Federal Funds Rate B) They are used by the Federal Reserve to change the discount rate C) They are used by the Federal Reserve to buy and sell mutual funds D) They are used by the Federal Reserve to transact with securities dealers E) They are probably the most influential tool the Federal Reserve has to alter money supply