An adverse supply shock would cause
A. the short-run Phillips curve to shift downward and to the left.
B. the short-run Phillips curve to shift upward and to the right.
C. a movement down the short-run Phillips curve.
D. a movement up the short-run Phillips curve.
Answer: B
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Which of the following correctly describes what the Fed used as monetary targets in the past?
A) The Fed used M1 and M2 as targets after 1993. B) After 1980 and before the 1990s, the Fed focused on interest rate targets. C) The Fed focused on M1 as a target after deregulation of the financial markets. D) The Fed increased its reliance on interest rate targets since the mid-1990s.
Does it appear that currency boards make fixed exchange rates credible?
What will be an ideal response?
Since classical economists believe that both V and Q are constants for an economy in short-run equilibrium, the equation of exchange becomes a theory in which:
a. the quantity of money explains prices. b. the quantity of money explains velocity. c. the quantity of money explains real GDP. d. changes in M cause changes in V. e. prices are never flexible
For the U.S. economy, money holdings are a
a. large part of household wealth, and so the interest-rate effect is large. b. large part of household wealth, and so the wealth effect is large. c. small part of household wealth, and so the interest-rate effect is small. d. small part of household wealth, and so the wealth effect is small.