When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

Consider an adverse supply shock in the RBC model. The central bank knows that the pre-shock level of output

A) can be maintained only by reducing the money supply. B) can be maintained only by holding constant the money supply, C) can be maintained only by increasing the money supply. D) cannot be maintained by any monetary policy.

The range in which there is diminishing marginal productivity starts at the point where: a. marginal product reaches its maximum

b. average product reaches its maximum. c. total product reaches its maximum. d. marginal product begins to decrease at an increasing rate.