A) proposals to change monetary policy must go through both the House and Senate before being sent to the president.
B) monetary policy works through changes in interest rates, and the Fed does not have the ability to change interest rates quickly.
C) changes in interest rates primarily influence consumption spending, and households make consumption plans far in advance.
D) changes in interest rates primarily influence investment spending, and firms make investment plans far in advance.
F) A) and D)
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A) 5/4.
B) 4/5.
C) 5.
D) 20.
F) All of the above
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The reduction in the money supply raises...View Answer
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Automatic ...View Answer
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The Federal Reserve Bank conducts U.S. m...View Answer
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A) increases the interest rate and so investment spending increases.
B) increases the interest rate and so investment spending decreases.
C) decreases the interest rate and so increases investment spending increases.
D) decreases the interest rate and so investment spending decreases.
F) A) and C)
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A) was opposed to the teaching of Keynes, who had taught that tax cuts were counterproductive.
B) was opposed to the teaching of Keynes, who had taught that all attempts to stabilize the economy were futile.
C) came from economists who had studied Keynes's ideas when those ideas were only a few years old.
D) came from economists who were unaware of Keynes's ideas because those ideas had not yet been widely disseminated at that time.
F) B) and C)
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A) used open-market operations to purchase mortgages and corporate debt, just as it frequently does even when the economy is functioning normally.
B) took the unusual step of using open-market operations to purchase mortgages and corporate debt.
C) explicitly set its target rate of inflation at zero.
D) explicitly set its target rate of inflation well above zero.
F) All of the above
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A) buy bonds to raise the interest rate
B) buy bonds to lower the interest rate
C) sell bonds to raise the interest rate
D) sell bonds to raise the interest rate.
F) B) and D)
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A) implies that the government should avoid being a cause of economic fluctuations.
B) implies that the government should respond to changes in the private economy to stabilize aggregate demand.
C) reflected the ideas promoted in Keynes's influential book, The General Theory of Employment, Interest, and Money.
D) All of the above are correct
F) A) and B)
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A) r = 0.03, P = 1.2
B) r = 0.03, P = 1.3
C) r = 0.04, P = 1.2
D) r = 0.05, P = 0.9
F) A) and D)
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A) offset the shifts in aggregate demand and thereby eliminate unemployment.
B) offset shifts in aggregate demand and thereby stabilize the economy.
C) enhance the shifts in aggregate demand and thereby create fluctuations in output and employment.
D) enhance the shifts in aggregate demand and thereby increase economic growth
F) A) and D)
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B) False
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A) Increases in the money supply shift aggregate demand to the right.
B) In the long run, increases in the money supply increase prices, but not output.
C) Recessions are associated with decreases in consumption, investment, and employment.
D) Government should use fiscal policy to try to stabilize the economy.
F) B) and C)
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A) increases the interest rate and so investment spending increases.
B) increases the interest rate and so decreases investment spending decreases.
C) decreases the interest rate and so investment spending increases.
D) decreases the interest rate and so investment spending decreases.
F) A) and C)
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A) by more than the amount of the tax cut.
B) by the same amount as the tax cut.
C) by less than the tax cut.
D) None of the above is necessarily correct.
F) B) and C)
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A) there will be an increase in the equilibrium quantity of goods and services demanded.
B) there will be a decrease in the equilibrium quantity of goods and services demanded.
C) there will be an increase in the equilibrium interest rate.
D) fewer firms will choose to borrow to build new factories and buy new equipment.
F) B) and C)
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A) the wealth effect.
B) the exchange-rate effect.
C) the interest-rate effect.
D) misperceptions theory.
F) A) and C)
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A) increase, so the money supply increases.
B) increase, so the money supply decreases.
C) decrease, so the money supply increases.
D) decrease, so the money supply decreases.
F) A) and B)
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A) $816. For this economy, an initial increase of $100 in consumer spending translates into a $250 increase in aggregate demand.
B) $816. For this economy, an initial increase of $100 in consumer spending translates into a $400 increase in aggregate demand.
C) $812. For this economy, an initial increase of $100 in consumer spending translates into a $250 increase in aggregate demand.
D) $812. For this economy, an initial increase of $100 in consumer spending translates into an $800 increase in aggregate demand.
F) All of the above
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