Which of the following statements best describes the central bank response to recession?
a. If recession threatens, the central bank uses a contractionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the right.
b. If recession threatens, the central bank uses an expansionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the right.
c. If recession threatens, the central bank uses an expansionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the left.
d. If recession threatens, the central bank uses an contractionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the left.
b. If recession threatens, the central bank uses an expansionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the right.
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An exogenous rise in government expenditures will have the same effect on GDP as an equal rise in either autonomous ________ or autonomous ________
A) consumption; investment B) taxes; consumption C) savings; investment D) taxes; investment
One factor that explains the short-run trade-off between inflation and unemployment is labor contracts that fix wages for an extended period of time
a. True b. False Indicate whether the statement is true or false
All other factors equal, if the costs of converting bonds and other financial securities to a means of payment increase:
A. it shouldn't impact the transactions demand for money. B. nominal interest rates should decrease. C. the transactions demand for money should increase. D. the transactions demand for money should decrease.
If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a
a. 0.33 percent increase in the quantity demanded. b. 3 percent increase in the quantity demanded. c. 30 percent increase in the quantity demanded. d. 48 percent increase in the quantity demanded.