Study_Guide_Final_Econ_3

Study_Guide_Final_Econ_3 - Study Guide for Final Econ 3...

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Study Guide for Final Econ 3 Part I – Multiple Choice Chapter 25 25-1. All else equal, an increase in the rate of inflation ____ planned spending and ____ short-run equilibrium output. A. increases; increases B. increases; decreases C. decreases; decreases D. decreases; increases 25- 2. If the Federal Reserve raises its target inflation rate, the monetary policy rule_____ and the aggregate demand curve _____. A. shifts upward to the left; shifts to the right B. shifts upward to the left; shifts to the left C. shifts downward to the right; shifts to the left D. shifts downward to the right; shifts to the right 25-3. When actual output exceeds potential output there is ____ output gap and the rate of inflation will tend to ____. A. an expansionary; increase B. an expansionary; decrease C. no; remain the same D. a recessionary; increase
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25-4. Refer to the figure above. If the Fed does not change its monetary policy rule, long-run equilibrium in this economy A. will be impossible to achieve. B. will occur when AD shifts upward and to the right. C. will occur when AS shifts downward and to the right. D. will occur when LRAS shifts to the left. 25-5. A large increase in oil prices is an example of: A. a favorable inflation shock. B. an adverse inflation shock C. inflation inertia. D. excessive aggregate spending.
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Chapter 26 26-1. If the Federal Reserve's target rate of inflation equals 5 percent, the target real interest rate equals 4 percent, and the actual inflation rate equals 5 percent, then the actual real interest rate equals: A. 4 percent. B. 5 percent.
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Study_Guide_Final_Econ_3 - Study Guide for Final Econ 3...

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