In reality, there is not one labor market, but many.

Economies of scale enable financial institutions to

A) reduce transactions costs. B) avoid the asymmetric information problem. C) avoid adverse selection problems. D) reduce moral hazard.

When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline