Given a vertical aggregate supply curve, which of the following is most likely to occur if the Fed pursues restrictive monetary policy?
A. The equilibrium output will decrease but the price level will stay the same.
B. The equilibrium price level and output will both decrease.
C. The equilibrium price level and output will both increase.
D. The equilibrium price level will decrease but output will stay the same.
Answer: D
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Import quotas
A) are the same as tariffs. B) set the maximum quantity of a good that can be imported. C) are not used by the United States. D) set the minimum percentage of the value of a product that must consist of imported components.
If nominal gross domestic product fell while real gross domestic product rose, which of the following must be true?
a) unemployment increased b) the inflation rate was negative c) net exports were negative d) the average of stock prices rose while bond prices fell e) nominal interest rates by less than the rate of inflation