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

The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goal of ________, it also can achieve the goal of ________ simultaneously

A) high employment; economic growth B) stability of financial markets; a low current account deficit C) high employment; lowering government spending D) economic growth; a low current account deficit

Which of the following will most likely occur during the contractionary phase of a business cycle?

a. Real GDP rises, and the unemployment rate falls. b. Real GDP declines, and the rate of inflation rises. c. The sales of most businesses decline, and the unemployment rate rises. d. Inflation rises, and employment/population ratio falls.