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  3. Principles of Macroeconomics Study Set 5
  4. Quiz 12: The Production Function Approach to Understanding Growth

A Horizontal Line Showing the Current Rate of Inflation,as Determined

Question 74
Multiple Choice

A horizontal line showing the current rate of inflation,as determined by past expectations and pricing decisions,is called the A) aggregate demand (ADI)curve. B) long-run aggregate supply line. C) inflation adjustment (IA)line. D) expenditure line E) short-run equilibrium output linE.

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Q 75
When there is a recessionary gap,inflation will __________,in response to which the Bank of Canada will ________ real interest rates,and output will _________. A) decrease;raise;decrease B) decrease;lower;increase C) decrease;lower;decrease D) increase;raise;decrease E) increase;lower;increase
Q 76
When there is an expansionary gap,inflation will __________,in response to which the Bank of Canada will ________ real interest rates,and output will _________. A) decrease;raise;decrease B) decrease;lower;increase C) decrease;lower;decrease D) increase;raise;decrease E) increase;lower;increase
Q 77
Inflation inertia is attributable to A) inflation shocks and shocks to potential output. B) output gaps and inflation shocks. C) disinflation and inflation shocks. D) output gaps and disinflation. E) inflation expectations and long-term wage and price contracts.
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