Suppose there is a decrease in short-run aggregate supply. If the Federal Reserve wants to stabilize output it should
a. buy bonds. These purchases also move the price level closer to its original level.
b. buy bonds. However these purchases move the price level farther from its original level.
c. sell bonds. These purchases also move the price level closer to its original level.
d. sell bonds. However these purchase move the price level farther from its original level.
b
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The private sector balance is saving ________ investment. If saving exceeds investment, a private sector ________ is lent to other sections. If investment exceeds saving, borrowing from other sectors finances a private sector ________
A) minus; deficit; surplus B) plus; surplus; deficit C) minus; surplus; deficit D) plus; deficit; deficit E) minus; surplus; surplus
In the short run with predetermined prices, when output is less than aggregate expenditure, firms will:
A. reduce production. B. decrease aggregate expenditure. C. increase aggregate expenditure. D. increase production.