Suppose the AD curve and the SRAS curve intersect to the left of the LRAS curve. Which of the following is true?

A) The economy is in a recessionary gap.
B) The economy is in an inflationary gap.
C) The economy is in a long-run equilibrium.
D) This situation is actually impossible.

A

Economics

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The coordination failure model is based on the possibility of increasing returns to scale

A) both at the aggregate level and at the level of the individual firm. B) at the aggregate level, but not at the level of the individual firm. C) at the level of the individual firm, but not at the aggregate level. D) in future periods, but not in the current period.

Economics

Compared to the past, FOMC meetings are now much more transparent. How might this transparency impact the effectiveness of monetary policy actions?

A) The transparency helps make the Fed's actions more credible and should help make policy actions more effective. B) The transparency undermines the effectiveness since financial markets can more quickly adjust their behavior to fight the policy actions. C) The transparency counteracts the secrecy in which fiscal policy is enacted, and therefore decreases its effectiveness. D) The transparency lengthens policy lags, so monetary policy takes longer to implement and take effect.

Economics