Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation.
B. low economic growth and high inflation.
C. high economic growth and low inflation.
D. low economic growth and low inflation.
Answer: B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Which of the following lowers the current price of an nonrenewable natural resource?
A) an increase in the interest rate B) a decrease in the stock of the resource C) an increase in the marginal revenue product of the resource D) an increase in the price of a substitute resource
The federal funds rate is closely tied to many interest rates on many types of loans. Which one is the exception?
a. Auto loan rates b. Adjustable rate mortgages c. Adjustable rate home equity loans d. 30-year Treasury bonds e. Business loans
Figure 10-6
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In Figure 10-6, which graph best illustrates an autonomous increase in consumption spending?
A. (1) B. (2) C. (3) D. (4)