Suppose that the economy begins at a long-run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?
A) a decrease in the quantity of money
B) an increase in the price of oil that decreases aggregate supply
C) an increase in the stock of capital that increases aggregate supply
D) an increase in government expenditures
B
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The federal funds rate is the interest rate that
(a) the Federal Reserve charges the federal government on its loans (b) banks charge one another for short-term loans (c) banks charge their best customers (d) equalizes the yield on government bonds and corporate bonds (e) is equal to the inflation rate
Price searchers can be expected to charge a price that
a. is the highest at which consumers will purchase any units. b. they expect to provide the largest possible flow of gross revenue. c. minimizes their per-unit costs of production. d. maximizes their profit.