In order to impact aggregate demand and the economy, the Fed needs to be able to influence:
A. every measure of the money supply.
B. MB only.
C. MB and M1
D. M1 and M2.
Ans: D. M1 and M2.
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If the Fed wants to lower the U.S. exchange rate, what action should it take in the foreign exchange market? Why does the action lower the exchange rate?
What will be an ideal response?
Dumping refers to selling a product abroad at higher prices than the product is sold domestically
Indicate whether the statement is true or false
In 2007-2009, the Fed cut interest rates to limit the international financial crisis. What is the effect of this on velocity?
a. It will decrease. b. It will increase. c. It will remain constant. d. Velocity is unrelated to interest rates.
If equilibrium GDP exceeds full-employment GDP,
A. The difference is the inflationary GDP gap. B. Inventories will accumulate. C. The difference is the recessionary GDP gap. D. Leakages must be greater than injections.