When the Federal Reserve raises the growth rate of the money supply to a permanently higher level, this produces ________ in real GDP and ________ in the inflation rate
A) a permanent increase, a permanent increase
B) a permanent increase, a temporary increase
C) no change, a temporary increase
D) a temporary increase, a temporary increase
E) a temporary increase, a permanent increase
E
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To maintain a fixed exchange rate, in response to an increase in the government budget deficit the central bank must
a. sell foreign currency from reserves. b. buy foreign currency. c. raise taxes. d. raise government spending. e. pass a law that increases the exchange rate.
In comparing the changes in TC and TVC associated with an additional unit of output, we find that:
A. the change in TVC is equal to MC, while the change in TC is equal to TFC. B. the change in TC exceeds the change in TVC. C. the change in TVC exceeds the change in TC. D. both TC and TVC are equal to MC.