Refer to Figure 11.2. Assume the economy is in equilibrium at 1, where real GDP equals potential GDP
The economy experiences a negative demand shock, and the Fed responds by decreasing real interest rates to bring real GDP and inflation back to their original levels. Other things equal, the Fed's response to the negative demand shock is best represented by a movement from A) point B to point D.
B) point C to point D.
C) point B to point A.
D) point C to point A.
C
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A monopoly produces a product ________ and there ________ barriers to entry into the market
A) identical to its many competitors; are B) with no close substitutes; are C) identical to its many competitors; are no D) with no close substitutes; are no E) slightly different from those of its many competitors; are
If the AD and AS curves intersect in the upward-sloping segment of the AS curve, and then taxes increase, we should expect to see the price level
a. rise and real GDP to rise b. rise and real GDP to fall c. rise and the unemployment rate to fall d. fall and real GDP to rise e. fall and the unemployment rate to rise