Refer to Figure 10.5. A shift from MP1 to MP3 will occur if
A) investors increase the short-term interest they expect in the future.
B) investors increase the term premium they require on long-term bonds.
C) the Fed decreases its target for the short-term nominal interest rate.
D) the expected inflation rate decreases.
C
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The above figure gives your budget line between CDs and magazines. If the price of a magazine falls, then the budget line
A) shifts outward and the slope does not change. B) rotates inward with no change in the horizontal intercept. C) rotates inward with no change in the vertical intercept. D) rotates outward with no change in the vertical axis.
Explain two concepts of central bank independence. Is the Fed politically independent? Why do economists think central bank independence is important?
What will be an ideal response?
Activists believe that postwar instability is primarily the result of
A) erratic growth of private investment. B) uneven changes in real government expenditures. C) uneven changes in private consumption of durables. D) A and C are both correct.
A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of
A) the money supply. B) compounding. C) regression towards the mean. D) averaging.