If there is a leftward shift of the money demand curve, which of the following should the Fed do if it wants to keep output stable?
a. Lower its interest rate target
b. Sell bonds in the open market
c. Wait, since output usually does not change when the money demand curve shifts
d. Raise its interest rate target
e. Buy bonds in the open market
B
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An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?
A) The price level will rise, and the level of GDP will fall. B) The price level will rise, and the level of GDP will be unaffected. C) The price level will fall, and the level of GDP will fall. D) The price level will fall, and the level of GDP will rise.
Facing stiff competition, Hendrix College, a small liberal arts institution in Conway, Ark
, decided two years ago to bolster its academic offerings, promising students at least three hands-on experiences outside the classroom, including research, internships and service projects. Although it raised tuition and fees by 29 percent, enrollment in the freshman class rose by 37 percent. Source: Jonathan D. Glater and Alan Finder, "In New Twist on Tuition Game, Popularity Rises With the Price," New York Times, December 12, 2006 Based on the information above, the demand for Hendrix College education is A) relatively elastic. B) unit elastic. C) perfectly elastic. D) More information is needed to answer the question.
All else equal, an increase in the government's budget deficit accompanied by a decrease in corporate taxes would definitely result in
A) an increase in the equilibrium real interest rate. B) a decrease in the equilibrium real interest rate. C) an increase in the equilibrium level of saving and investment. D) a decrease in the equilibrium level of saving and investment.
Government actions can cause a
A) shift in the supply curve. B) shift in the demand curve. C) reaction from firms in other countries. D) All of the above.