An argument in favor of the Federal Reserve adopting inflation targeting is that in the long run, the Fed can have an impact on inflation but not on real GDP
Indicate whether the statement is true or false
TRUE
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
The Fed conducts an open market sale of Treasury bills of $5 million. If the required reserve ratio is 0.20, what change in the money supply can be expected using the oversimplified money multiplier?
a. $25 million b. $5 million c. 0 d. ?$5 million e. ?$25 million
If consumers reduced their spending, what would happen to the interest rate and investment?
Which of the following is a correct statement?
A. The more elastic the demand, the higher the profit-maximizing markup. B. The less elastic the demand, the higher the profit-maximizing markup. C. The lower the marginal cost, the higher the profit-maximizing price. D. The lower the average cost, the higher the profit-maximizing price.