With discretionary policy making, fiscal and monetary policies are usually
A. immune to any lag times that might counter their effectiveness.
B. set according to pre-established standards that do not take into account any changes in the economy.
C. undertaken in response to or anticipation of some change in the overall economy.
D. immune to any political overtones.
Answer: C
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When the Fed buys government bonds on the open market, the money supply expands
Indicate whether the statement is true or false
The interest-rate effect is partially explained by the fact that a higher price level reduces money demand
a. True b. False Indicate whether the statement is true or false
When the Fed increases the required reserve ratio, a bank's
A) excess reserves are unaffected. B) excess reserves are increased. C) excess reserves are decreased. D) required reserves are decreased. E) b and d
Suppose a price ceiling is set above the equilibrium price. Now suppose that policy makers decide to raise the price ceiling. This increase in the price ceiling will cause which of the following to occur?
A) The surplus in the market will increase. B) The surplus in the market will decrease. C) The shortage in the market will increase. D) none of the above