An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.

If the ratio of the dollar price of a U.S. toy to the dollar price of a Chinese toy is less than one:

A) retailers in the U.S. should buy the toys from both Chinese suppliers and American suppliers. B) retailers in the U.S. should not buy the toys from both Chinese suppliers and American suppliers. C) retailers in the U.S. should buy the toys from Chinese suppliers. D) retailers in the U.S. should buy the toys from American suppliers.

The discount rate is the interest rate

A) banks pay on certificates of deposit. B) the Fed pays on reserves held by banks. C) the Fed charges when it lends reserves to banks. D) banks charge their loan customers. E) on short-term Treasury securities.