In the 1965 to 1973 period, U.S. policymakers ________
A) targeted an unemployment rate that, in hindsight, was likely too low
B) pursued an easing of monetary policy designed to increase aggregate demand
C) made some mistakes that led to the most sustained inflationary episode in U.S. history
D) all of the above
E) none of the above
D
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With price on the vertical axis and quantity on the horizontal axis, economists would draw a fall in supply as
A) a leftward shift in the supply curve. B) a rightward shift in the supply curve. C) a vertical supply curve. D) any which way we like.
Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is below the 45-degree line at full-employment GDP. This vertical distance is called a(n):
A. inflationary gap. B. recessionary gap. C. negative GDP gap. D. marginal propensity to consume gap.