Refer to the given figure.
If the Federal Reserve wants to set the nominal interest rate at 9 percent, it must conduct open market ________ to set the money supply at ________.
A. sales; 900
B. sales; 100
C. purchases; 900
D. purchases; 100
Answer: B
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If the interest rate on a security consists only of the riskless rate, then
A) there is no uncertainty. B) velocity is constant. C) the money supply is fixed. D) the price level is fixed.
Which of the following historical events is often cited as an example of the successful implementation of Keynesian theory?
a. the Kennedy-Johnson tax cut of 1964 b. the price controls of the Nixon administration c. the anti-inflation policies of the Carter administration d. the series of tax cuts implemented by the Reagan administration during the 1980s
If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should:
a. decrease his spending on cola. b. decrease his spending on cola and increase his spending on shirts. c. increase his spending on shirts. d. increase his spending on cola and decrease his spending on shirts.
The statement that "IBM's stock closed at $85" is
a. a normative statement b. a positive statement c. a macroeconomic observation d. financial manipulation e. a sign that the market may be undervalued