Using the aggregate expenditure model, the equilibrium level of the aggregate expenditure can occur when the economy is producing
A) only at above full employment.
B) at full employment, above full employment, or below full employment.
C) at either below full employment or at full employment but never at above full employment.
D) only at below full employment.
E) only at full employment.
B
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When the Fed engages in an open market sale, the money supply ________ and the nominal interest rate ________.
A. decreases; decreases B. increases; increases C. decreases; increases D. increases; decreases
Which of the following is NOT a basis for the Taylor-rule guideline for how the Federal Reserve should set its target value for the federal funds rate?
A) the current deviation of the actual inflation rate from the Fed's inflation objective B) the gap between actual real GDP and a measure of potential real GDP C) an estimated long-run real interest rate D) the present deviation of the actual unemployment rate from the Fed's unemployment objective
Which graph shows the impact of scientists developing a more powerful fertilizer?
A) Figure A B) Figure B C) Figure C D) Figure D
In a two-period model with default, if the market interest rate is low, then
A) default is more likely B) there is no effect on the nation's default decision. C) default is less likely. D) the income effect is larger than the substitution effect.