One News Wire article in the text has the title "Fed Cuts Key Interest Rate Half-Point to 1 Percent." Assuming the economy is in the upward sloping portion of the eclectic aggregate supply curve, what should happen to the price level and output as a result of the Fed's action, ceteris paribus?
A. The equilibrium price level and equilibrium output should both increase.
B. The equilibrium price level should increase and equilibrium output should decrease.
C. The equilibrium price level should decrease and equilibrium output should increase.
D. The equilibrium price level and equilibrium output should both decrease.
A. The equilibrium price level and equilibrium output should both increase.
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An economy experiencing an expansionary gap: a. operates in an environment in which labor shortages drive up money wages, real wages, and prices. b. has an excess supply of labor due to rising money wages and prices
c. will self-correct as rising money wages decrease faster than rising prices. d. will experience rising money wages and prices but falling real wages. e. will have excessive involuntary unemployment.
Monetizing deficits has lead to serious inflation in
a. the United States. b. Canada. c. the United Kingdom. d. Russia, Latin America, and Israel. e. All of the above are correct.
An early frost in the vineyards of Napa Valley would cause a(n)
a. increase in the demand for wine, increasing price. b. increase in the supply of wine, decreasing price. c. decrease in the demand for wine, decreasing price. d. decrease in the supply of wine, increasing price.
If we observe that Jamie’s budget constraint has moved outward, then we know for certain that
a. the price of one or both of the goods must have decreased. b. she will be indifferent between goods X and Y. c. she can reach a higher indifference curve. d. her income must have increased.