Assuming the central bank follows a money supply target, then an increase in the demand for money
a. will shift the position of the LM schedule away from the predicted level even if the target level of the money supply is achieved.
b. will shift the position of the LM schedule toward the predicted level as long as the target level of the money supply is achieved.
c. may or may not shift the position of the LM schedule away from the predicted level even if the target level of the money supply is achieved.
d. None of the above
A
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If a firm acquires the stock of a competing firm that causes a substantial lessening of competition, it would be in violation of the:
a. Clayton Act. b. Robinson-Patman Act. c. Sherman Antitrust Act. d. Federal Trade Commission Act. e. Interstate Commerce Act.
Prices are useful in coordinating society’s economic planning because
A. they convey information about which goods are scarce and which are plentiful. B. economies based on price systems are more flexible than centrally planned economies. C. economies based on price systems are more likely than centrally planned economies to minimize the cost of producing society’s output. D. All of the responses are correct.
In the short run, a fiscal policy action that results in a reduction in the size of the budget deficit will cause
A. an inflationary gap if the economy was initially operating below full employment. B. an increase in real GDP with stable prices if the economy was below full employment. C. an inflationary gap if the economy was initially operating at full employment. D. a reduction in real GDP with falling prices if the economy was below or at full employment.
The expected real interest rate approximately equals
A) the nominal interest rate minus the tax rate. B) the nominal interest rate minus the expected rate of inflation. C) the nominal interest rate plus the expected rate of inflation. D) the yield to maturity on a coupon bond held to maturity.