Why would the Fed intentionally use contractionary monetary policy to reduce real GDP?
A. The Fed intends to reduce unemployment, which occurs if real GDP is greater than potential GDP
B. The Fed intends to reduce real GDP so that real GDP will grow again but at a faster pace
C. The Fed intends to reduce inflation, which occurs if real GDP is greater than potential GDP
C. The Fed intends to reduce inflation, which occurs if real GDP is greater than potential GDP
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When the change in unplanned inventories is positive, then
A) planned inventories will increase in order to return to equilibrium. B) real GDP is less than aggregate planned expenditure. C) real GDP equals aggregate planned expenditure. D) real GDP is larger than aggregate planned expenditure. E) economic growth will occur as the economy returns to equilibrium.
If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then according to the averaging equation, the value of price elasticity of demand in absolute terms is
a. 0.33 b. 2.33 c. 0.25 d. 3 e. 0.66