The Fed hopes to impact short-run inflation and output by altering:
A. aggregate supply.
B. aggregate demand.
C. fiscal policy.
D. the production function.
Answer: B
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A firm that is operating at a loss may continue to operate for a while because of costs that it will still have to pay even if production ceases.
Answer the following statement true (T) or false (F)
The Consumer Price Index (CPI) is a measure of the:
a. cost of a market basket of consumer goods and services relative to its cost in a base year. b. change in the average price of a market basket of necessary goods and services c. cost of a market basket of consumer goods relative to the previous year. d. change in the average price of all intermediate goods and services. e. average price of all final goods and services relative to the average price in the previous year.
Changes in reserve requirements are made within legal limits by
a. the Federal Open Market Committee. b. Federal Reserve Banks. c. member banks of the Fed. d. the Board of Governors.
Most nations do not push the rate of economic growth to the maximum because
a. it would be impossible to do so b. they do not know how to do so c. there is an opportunity cost associated with economic growth d. maximum growth would create an inefficient economy e. government budget deficits prevent them from doing so