Assume the economy is initially in equilibrium where potential GDP is greater than real GDP
If the expected inflation rate, the term structure effect, and the default-risk premium are constant, a decrease in the Fed's target short-term nominal interest rate will ________ the MP curve and the output gap will become ________. A) shift up; smaller
B) shift up; larger
C) shift down; smaller
D) shift down; larger
C
Economics
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In traditional economies, people base economic decisions on the precedents established by previous generations
a. True b. False Indicate whether the statement is true or false
Economics
The short-run Phillips curve will tend to shift during any period when: a. aggregate supply changes
b. real wages or input prices change because of changes in the supplies of labor or other inputs. c. inflationary expectations change. d. all of the above
Economics