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
You might also like to view...
To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Referring to the above figure, how much tax per unit has the government imposed?
A) cb B) db C) ab D) ca
When the price level is rising at ______ and the real interest rate is 1 per-cent a year, the nominal interest rate is 3 percent a year
A. 4 percent a year B. 3 percent a year C. 2 percent a year D. 1 percent a year
The value of an item expressed in today's dollars is known as
A) inflation. B) deflation. C) the nominal value. D) the real value.
According to the Keynesian consumption function, an increase in disposable income will result in
A) a decrease in consumption. B) an increase in consumption. C) a decrease in investment. D) an increase in investment.