If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decrease the required reserve ratio
b. decrease the interest rate the Fed pays on bank reserves
c. buy government bonds
d. all of the above
d
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The marginal social cost of a good or service is the cost borne by the producer
Indicate whether the statement is true or false
Which is NOT an example of moral hazard
a. people eat more at all-you-can-eat buffets b. loggers clear-cut a tract of land when paying a fixed fee rather than when paying per tree felled c. Drivers of heavier, safer cares are less likely to run stop signs d. workers on commission work harder than those paid an hourly wage
During the period from 2001 to 2006, there were several major cuts in personal income tax rates. What effect did these have on the value of the multiplier?
a. They decreased the value of the multiplier. b. They had no effect on the multiplier. c. They increased the value of the multiplier. d. The effect was uncertain.
The higher the rate of inflation, the lower the:
A. real interest rate can fall. B. real interest rate can fall, as long as it is positive. C. nominal interest rate can fall. D. nominal interest rate can fall, as long as it is positive.