Raising the federal funds rate shifts the aggregate demand curve ________, so that real GDP________ and the price level ________.
A) rightward; increases; rises
B) leftward; decreases; rises
C) rightward; increases; falls
D) leftward; increases; rises
E) leftward; decreases; falls
Question 2
The deadweight loss associated with producing a product that has an external cost occurs because
A) too much output is produced.
B) too little output is produced.
C) the price that firms charge for the good is too high.
D) not enough resources are allocated to producing the good.
E) the marginal social cost does not equal zero.