Possible targets for monetary policy include all of the following except
A) the government's budget deficit or surplus.
B) money growth rate.
C) expected changes in the price level.
D) the interest rate.
Ans: A) the government's budget deficit or surplus.
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When the level of the stock market is high, investment spending tends to be high, ceteris paribus
Indicate whether the statement is true or false
According to the quantity theory of money, if the economy were facing inflation, the Federal Reserve Bank could combat it by:
A. increasing the supply of money. B. increasing taxes. C. cutting taxes. D. decreasing the supply of money.
The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the:
A. paradox of voting. B. concept of logrolling. C. median-voter model. D. Coase theorem.
Suppose at present people hold a quantity of money equal to 85% of nominal GDP. What happens to velocity if people wish to increase their money holdings to 80% of nominal GDP?
A) Velocity can increase or decrease depending on people's tastes and preferences toward money. B) Velocity is unaffected. C) Velocity increases. D) Velocity decreases.