When the economy suffers a temporary negative supply shock, the central bank's autonomous monetary policy to keep inflation at the target inflation rate leads to
A) more stable economic activities.
B) a large deviation of output from its potential.
C) divine coincidence.
D) both B and C.
B
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When the Fed lowers the federal funds rate and the real interest rate falls, what happens to the opportunity cost of investment? What happens to investment?
What will be an ideal response?
For an oligopoly, when the quantity effect outweighs the price effect, the typical firm may find it optimal to:
A. decrease output. B. increase output. C. collude. D. expect firms will enter the industry.
Injunctions are good remedies for problems where damage has already occurred.
Answer the following statement true (T) or false (F)
The Federal Reserve could target both the money supply and the interest rate at the same time if it controlled money demand along with money supply
Indicate whether the statement is true or false