Question 1
If the Fed has a strong preference for stable output relative to prices, the ________ curve is relatively ________.
◦
AD; steep
◦
AD; flat
◦
AS; steep
◦
AS; flat
Question 2
In a binding situation
◦ only changes in the price level change the interest rate.
◦ only changes in the
Z factors change the interest rate.
◦ changes in neither the price level nor in the
Z factors change the interest rate.
◦ the interest rate is always negative.