Which of the following is a possible cure for ongoing inflation?
a. The Fed could pursue anti-cyclical monetary policy.
b. The Fed could increase money supply whenever the AD curve shifts to the right.
c. The Fed could maintain a constant interest rate target regardless of economic circumstances.
d. The Fed could always try to keep the unemployment rate below the natural rate.
e. The Fed could pursue anti-cyclical fiscal policy.
A
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As a possible approach to eliminating the government budget deficit, increasing taxes on the rich only would
A) not lead to a significant increase in tax revenues. B) lead to a significant increase in tax revenues. C) lead to an increase in real GDP. D) lead to a greater number of entitlements.
Assume that markets clear. If in the labor market there is
a. an excess supply of labor, wages will rise b. an excess demand for labor, wages will fall c. an excess demand for labor, wages will rise d. an excess supply of labor, wages stay constant e. a decline in labor demand, wages will rise
The real balance effect helps to explain "a change in
A) aggregate demand." B) the quantity demanded of Real GDP." C) aggregate supply." D) the quantity supplied of Real GDP."
The figure below shows an IS-LM-FE model for an economy with fixed exchange rates. Initially the economy is at Point A, a triple intersection. Here, the FE curve is steeper than the LM curve.
To maintain the fixed exchange rate and keep the economy at Point B, the monetary authority must
A. sell foreign currency and sell domestic government bonds. B. buy foreign currency and sell domestic government bonds. C. buy foreign currency and buy domestic government bonds. D. sell foreign currency and buy domestic government bonds.