When there is an inflationary gap:
a. Employment exceeds full employment
b. Employment equals full employment.
c. Employment is less than full employment.
d. Any of the above is possible.
a
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An economy can produce various combinations of food and shelter along a production possibilities curve (PPC). Suppose a technological innovation resulted in a new, higher-yielding crop that generated more bushels of grain for a given set of land, labor, and capital resources. If this innovation did not affect the productivity of shelter production, then which of the following would be true?
a. The production possibilities curve (PPC) will shift outward equally along both axes of the graph. b. The PPC will not change. c. The PPC will rotate outward along the food axis, but will not shift on the shelter axis. d. The PPC will rotate inward along the food axis, but will not shift on the shelter axis.
Monetary policy includes all of the following, except
A. changes in government spending on goods and services. B. changes in reserve requirements. C. changes in the discount rate. D. buying and selling government securities on the open market.