If inflation is a threat, then the Fed will be expected to engage in
A) expansionary monetary policy.
B) contractionary monetary policy.
C) policies to increase the money supply.
D) policies to lower the rate of interest.
Ans: B) contractionary monetary policy.
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Which of the following is considered a default-risk-free instrument?
A) a three-month commercial paper issued by GE B) a share of stock issued by Google C) a three-month Treasury bill D) a ten-year bond issued by Intel
According to the purchasing power parity theory, in the long run
a. the exchange rate between any two currencies should be equal all over the world b. the value of the dollar should equal the value of the pound which should equal the value of the yen c. inflation rates should equalize around the world d. interest rates should equalize around the world e. the exchange rate between the Canadian dollar and the British pound should reflect differences in price levels between Canada and Britain
When a person receives an increase in wealth, what is likely to happen to consumption and saving?
A. Consumption decreases and saving decreases. B. Consumption decreases and saving increases. C. Consumption increases and saving increases. D. Consumption increases and saving decreases.
What have been the principal effects of the persistent trade deficits?
What will be an ideal response?