Refer to Figure 12.4. As a result of the monetary policy taking ...

[Deast7027]

Refer to Figure 12.4. As a result of the monetary policy taking effect after the housing bubble had already burst, real GDP will be ________ potential GDP and the rate of inflation will be ________ the rate of inflation when the economy was initially
 
  in equilibrium. A) greater than; greater than
  B) greater than; less than
  C) less than; less than
  D) less than; equal to

Question 2

If the marginal product of capital is greater than the rental cost of capital in terms of goods and services, then ________.
 
  A) the firm should continue to produce using that same amount of capital
  B) the firm should add additional capital
  C) the firm should reduce the amount of capital is using
  D) diminishing returns have been avoided

[wuly]

Answer to Question 1

C

Answer to Question 2

B

[Deast7027]

TYSM

[kishoreddi]

Excellent