If the Fed increases the real interest rate as a response to a decrease in the inflation rate, the ________, which results in a ________
A) MP curve shifts up; movement down the AD curve
B) MP curve shifts up; movement up the AD curve
C) IS curve shifts up; movement down the AD curve
D) IS curve shifts up; movement up the AD curve
B
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GDP can be computed as the sum of
A) all sales that have taken place in an economy over a period of time. B) the total expenditures of consumers and business over a period of time. C) the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time. D) the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time.
Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?
A) the external cost of production B) the explicit cost of production C) the social cost of production D) the private cost of production
Monopolistically competitive firms earn zero economic profit in the long run as do perfectly competitive firms. Does this mean that total surplus is maximized in a monopolistically competitive market?
What will be an ideal response?
If a government limits interest rates to a level below equilibrium, how do savers and investors respond? How is the discrepancy resolved?
What will be an ideal response?