If the real interest rate is above zero, we know that the nominal interest rate must be:

Suppose the economy is producing at the natural rate of output. An open market sale of bonds by the Fed will cause ________ in real GDP in the long run and ________ in inflation in the long run, everything else held constant

A) an increase; an increase B) a decrease; a decrease C) no change; an increase D) no change; a decrease

Subsidies are most likely to:

A. leave total economic surplus unchanged, but transfer surplus from producers to consumers. B. reduce total economic surplus. C. increase total economic surplus. D. reduce consumer surplus.