The slope of the monetary policy reaction curve is determined by:
A. how strongly the economy reacts to changes in the nominal interest rate.
B. how strongly the inflation rate impacts peoples' decisions.
C. people's expectations for inflation.
D. how aggressively policymakers change interest rates in response to deviations between current and target inflation rates.
Answer: D
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Before it became illegal, cigarette manufacturers once relied heavily on TV advertising. According to the textbook, when the government banned TV advertising, the cigarette manufacturers:
A. were made worse off because the ban significantly reduced cigarette sales. B. thought their First Amendment rights were being violated. C. supported the ban due to their concern over health effects of smoking. D. benefited because the decision about whether to advertise on TV was a prisoner's dilemma.
In the money market, an excess demand of money will:
A) increase the supply of bonds, increase bond prices, and decrease interest rates. B) increase the supply of bonds, decrease bond prices, and decrease interest rates. C) increase the supply of bonds, increase bonds prices, and increase interest rates. D) increase the supply of bonds, decrease bond prices, and increase interest rates.
In the Hotelling model, firms can avoid price competition by differentiating their products
Indicate whether the statement is true or false
The fact that the United States has become a net debtor nation is an indication that
A. As undesirable as they are, trade restrictions are becoming a necessity. B. The United States should never have abandoned the gold standard. C. The U.S. economy is highly regarded by world investors. D. The U.S. economy is in a long-term decline compared to other major economies.