When a monopolist reduces the quantity of output it produces and sells, the
a. price of its output increases.
b. price of its output remains constant.
c. price of its output decreases.
d. profits for the firm always decrease.
a
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A recessionary GDP gap is the
A. Difference between leakages and injections. B. Sum of leakages and injections. C. Same as an inflationary gap. D. Horizontal distance between full-employment GDP and equilibrium GDP.
Use the following diagram to answer the next question.
Based on this diagram, we can say ________.
A. monetary policy is likely to be more effective at fighting a recession than fiscal policy B. investment demand is very sensitive to changes in the interest rate C. an increase in the money supply will have little effect on investment or aggregate demand D. expansionary monetary policy will be more effective at increasing aggregate supply than aggregate demand