Which of the following is the least likely take place if the Fed responds to a negative demand shock by reducing the real interest rate?
A) IS shifts to the right
B) output gap returns to zero
C) inflation returns to its previous rate
D) MP shifts down
A
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Canada is classified by the International Monetary Fund as
A) an advanced economy. B) a developing economy. C) a transition economy. D) an emerging market economy. E) a natural-resource based economy.
The marginal rate of substitution is
A) the rate at which the consumer will give up one good to get an additional unit of another good while remaining on the same indifference curve. B) the rate at which utility increases as the consumer increases purchases of a good, holding purchases of the other good constant. C) the rate at which a consumer will exchange a good for income holding prices constant. D) None of the above answers is correct.