In which situation would contractionary monetary policy be most effective?
A) The economy has been in a long recession but signs of improvement are starting to appear.
B) A crisis overseas has led to a spike in oil prices, causing the price of gasoline and other goods to increase.
C) Consumer confidence is very strong, leading to a record holiday shopping season despite fewer discounts being offered.
D) Businesses worry that shoppers are being very cautious about their spending because they are concerned about job safety.
Ans: B) A crisis overseas has led to a spike in oil prices, causing the price of gasoline and other goods to increase.
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When the real interest rate is less than zero, then:
a. a creditor will gain purchasing power. b. a creditor will just break even on his or her real loan return. c. a creditor will lose purchasing power. d. a creditor will benefit from inflation. e. a creditor's purchasing power will not be affected, because the nominal interest rate is greater than zero.
The equilibrium quantity of Smids would be found by
a. choosing a quantity that generated the highest market price b. setting price equal to the revenue target desired by firms c. solving for the price that generates the maximum revenue for sellers d. choosing the quantity desired by consumers and working backward to solve for theprice associated with that quantity e. determining the price and quantity where the demand and supply curves intersect
Suppose a country had net exports of $7.5 billion and sold $44.6 billion of goods and services abroad. This country had
a. $44.6 billion of imports and $52.1 billion of exports. b. $52.1 billion of exports and $44.6 billion of imports. c. $44.6 billion of imports and $37.1 billion of exports. d. $44.6 billion of exports and $37.1 billion of imports.
Congress passed legislation to create the federal reserve system in 1913 in order to
A. Take the monetary control over the economy away from the Treasury Department B. End the instability created by a huge crude oil price hike during that time C. End the instability created by bank panics by acting as a lender of last resort