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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Which of the following three actions would not be used by the Fed to influence interest rates?
a. selling securities b. buying stocks c. setting reserve requirements d. changing the discount rate e. moral suasion
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the formAVC = a + bQ + cQ2and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000. If Straker Industries produces 20 units of output, what is estimated total cost (TC)?
A. $2,348 B. $1,498 C. $1,348 D. $4,428
Producer surplus is measured as the area
A. below the demand curve and above the market price. B. below the supply curve and above the market price. C. above the supply curve and below the market price. D. above the demand curve and below the market price.
How does the imposition of an excise tax on a good affect its market equilibrium?
A. Equilibrium quantity increases, and equilibrium price decreases. B. Equilibrium quantity decreases, and equilibrium price increases. C. Equilibrium quantity decreases, and equilibrium price decreases. D. Equilibrium quantity increases, and equilibrium price increases.