If economists say that a 7 percent growth in the money supply will increase aggregate demand by 7 percent, they are assuming that velocity
A. will decrease.
B. is constant.
C. will increase.
D. is unpredictable.
Answer: B
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Fed Chairman Alan Greenspan managed to keep the rate of inflation low as the economy was growing at a brisk pace by setting and hitting low money supply growth rate targets
Indicate whether the statement is true or false
You can also think of interest as:
A. the cost of inflation. B. the price of borrowing per dollar C. the time it takes a bond to mature. D. All of these statements are true.
The 1970s was a period of high productivity growth in the United States.
Answer the following statement true (T) or false (F)
Refer to the given diagram for the federal funds market. If the Fed wants the federal funds rate to be i f1 , what quantity of reserves do they need to make available to banks?
A. Q f1 .
B. Q f2 .
C. Q f3 .
D. It cannot be determined with the information given.