Refer to Figure 17-1. Suppose that the economy is currently at point A on the short-run Phillips curve in the figure above, and the unemployment rate at A is the natural rate
If the economy was to move to point C, which of the following must be true?
A) Equilibrium GDP at point C must be above potential GDP.
B) The Fed conducted contractionary policy to cause the move.
C) The Fed sold treasury bills to cause the move.
D) The economy is producing a level of GDP equal to potential GDP.
E) Aggregate demand must have decreased.
A
Economics
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Using the equation of exchange and assuming full employment and a constant velocity of money, a decrease in the required reserve ratio would result in a
A. Lower velocity. B. Lower price level. C. Lower quantity of real output. D. Higher price level.
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