When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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The general approaches to global poverty reduction include all of the following except
A. Redistribution of incomes across nations. B. Economic growth that raises average incomes. C. Redistribution of incomes within countries. D. An increase in government control of resources.
Suppose that production for good X is characterized by the following production function, Q = 4K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $86.80 and the per-unit wage, w, is $20, then the average total cost of using 25 units of capital and 49 units of labor is:
A. $5.25. B. $31.00. C. $22.50. D. There is insufficient information to determine the average total costs.
If an individual's utility from consuming two goods increases, then there must be
A. in inward shift of the individual's indifference curve. B. an outward shift of the individual's indifference curve. C. a downward rotation of the individual's indifference curve. D. an inward rotation of the individual's indifference curve.
The deposit expansion multiplier would increase if the Fed were to
A) raise the required reserve ratio. B) lower the required reserve ratio. C) raise the discount rate. D) sell bonds.