If the Federal Reserve reduces the federal funds rate,
A. other interest rates, such as home mortgage rates, will rise to compensate.
B. long-term interest rates will react more than short-term rates.
C. the quantity of funds borrowed and lent will decrease.
D. inflation is more likely to occur.
Answer: D
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Business cycles disappear when firms
A) hold nominal wages constant as nominal demand changes. B) hold prices constant as nominal demand changes. C) change prices proportionately with nominal demand changes. D) change wages proportionately with nominal demand changes.
People have less incentive to invest the more concerned they are that their investment will not be
a. appropriated by government b. stolen by thieves c. protected from high tax rates d. destroyed by civil unrest e. blown up by terrorists
Patents are most likely to infringe on innovation:
A. for products that incorporate many different technologies into a single product. B. of simple, easy-to-copy products. C. in the pharmaceutical industry. D. when they cause creative destruction.
In 2005 hurricane Katrina devastated large portions of the Gulf Coast economy. Many refineries went offline disrupting oil refining and distribution. What do you think was a likely result?
A) the restricted supply constituted a cost push shock that would have shifted the long run AS curve to the right B) the restricted supply constituted a cost push shock that would have shifted the short run AS curve to the left C) the restricted supply constituted a cost push shock that would have meant an upward movement along the Phillips curve D) all of the above E) none of the above