True or False: Bond Prices and the nominal interest rate always move in opposite directions

a. True

b. False

Suppose the economy is at a long-run equilibrium. Which of the following could result in an inflationary gap?

a. The U.S. government approves $400 billion dollars in fighter jets.

b. The Middle East erupts in war, sending oil prices skyrocketing.

c. The Federal Reserve raises interest rates.

d. Europe's corporation's profits and income falls as a result of a Brexit.

The Keynesian Model believes that the business cycles are caused primarily by

a. changes in Autonomous Expenditures.

b. changes in productivity.

c. changes in monetary policy.

d. changes in technology.

Suppose that the economy was initially at a long-run equilibrium. Using the AS-AD model, if the Fed decreased the money supply real GDP would ____________. This view of the business cycle is most consistent with _______________.

a. decrease; monetarism.

b. increase; monetarism.

c. decrease; classical economics.

d. increase; classical economics.

Which of the following does not cause a recessionary gap

a. A fall in labor productivity

b. A decrease in government expenditures

c. An increase in Taxes

d. An increase in the amount of imports