Explain whether Delta Airlines' sales are likely to fluctuate more or less than the sales of each of the following firms as the economy moves from recession to expansion and back to recession.
Whirlpool Corporation (appliance manufacturer)
Taco Bell
The Boeing Company (aircraft manufacturer)
GameStop (video game sales and rentals)
Ques. 2Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent, how do you expect inflation to change?
What will be an ideal response?
Ques. 3Open market operations refer to the buying and selling of ________ by the ________ to control the money supply.
A) Treasury securities; Federal Reserve B) stocks and bonds; Treasury Department
C) stocks and bonds; Federal Reserve D) Treasury securities; Treasury Department
Ques. 4An increase in the price level ________ real wealth, which causes consumption to ________.
A) lowers; decrease B) raises; decrease C) lowers; increase D) raises; increase
Ques. 5In the dynamic aggregate demand and aggregate supply model, what is the result of aggregate demand increasing faster than potential real GDP?
What will be an ideal response?
Ques. 6Refer to Figure 27-6. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely pursue
A) expansionary automatic stabilizers.
B) contractionary monetary policy.
C) contractionary fiscal policy.
D) expansionary monetary policy.
E) expansionary fiscal policy.
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