The U.S. economy is relatively closed in terms of economic activity related to exports and imports

When the economy is hit by a negative demand shock and the central bank pursues policies to increase aggregate demand to its initial level, then

A) inflation will be lower. B) output will be at its potential. C) output will be lower. D) inflation will be unchanged. E) both B and D.

Under laissez-faire, society’s decisions about how much of every product to produce depend on

A. consumer preferences only. B. production costs only. C. consumer preferences and production costs. D. neither consumer preferences nor production costs.