Can the Fed control both the interest rate and the size of the money supply? Explain
The Fed faces a trade-off: It can choose an interest rate target or a money supply target, but not both. If it
decides to target the money supply, it must allow the interest rate to move with fluctuations in money
demand. If it decides to target the interest rate, then it must adjust the money supply in response to changes
in money demand.
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Next period's capital is equal to current-period investment
A) plus the amount of current capital left over after depreciation. B) minus the amount of current capital left over after depreciation. C) plus the amount of current period depreciation. D) minus the amount of current period depreciation.
Another term for the equilibrium price is
A) excess demand. B) nominal price. C) law of demand. D) market clearing price.
The possibility of immiserizing growth can arise when
A. the terms of trade of a small country decline due to changes in the rest of the world. B. the import-competing goods are overproduced in a large country. C. there is a decline in the research and development investments in a large country. D. a large country expands the production of its export-oriented goods.
B. excluded when calculating GDP because they do not reflect current production
A. added to exports when calculating GDP because imports reflect spending by Americans. B. subtracted from exports when calculating GDP because imports do not constitute spending by Americans. C. subtracted from exports when calculating GDP because imports do not constitute production in the United States. D. added when calculating GDP because imports do not constitute production in the United States.