When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; raise; decline
B. decline; lower; expand
C. increase; raise; decline
D. decline; lower; decline
Answer: B
You might also like to view...
Fiscal policy is most effective in controlling inflation when the economy operates in the _____ region of the aggregate supply curve
a. horizontal b. vertical c. upward rising d. downward sloping e. backward bending
An analysis of countries experiencing rapid inflation indicates that inflation is generally
a. caused by strong labor unions that push wages up rapidly. b. caused by rapid growth in the money supply. c. the result of restrictive macroeconomic policy, which pushes up interest rates. d. the result of bad weather conditions that reduce the supply of agriculture products.
An increase in the price of product B leads to an increase in the demand for product C. This indicates that products B and C are
A. normal goods. B. inferior goods. C. complementary goods. D. substitute goods.
A tariff shifts the ___________ curve to the ___________.
A. demand; right B. demand; left C. supply; right D. supply; left