If the Fed's monetary policy reaction function does not change, then when inflation decreases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.
A. decreasing; increases; increases
B. decreasing; decreases; decreases
C. increasing; decreases; decreases
D. increasing; increases; decreases
Answer: A
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The demand for durable goods
A) declines by a greater percentage than does GDP during a recession. B) declines by a smaller percentage than does GDP during a recession. C) rises by a greater percentage than does GDP during a recession. D) has decreased over time.
On May 25, 1980 three pals graduated from high school, pooled together $3,000 and put the money into an account promising to pay 8% for the next 30 years. On May 25, 2010 they withdrew all the money from the account. To the nearest dollar, how much did they withdraw?
a. $25,962 b. $27,297 c. $30,188 d. None of the above are correct to the nearest dollar.
Situation 32-1 In the early 1980s, the U.S. automobile industry managed to influence the government to negotiate a voluntary export restraint agreement with Japan that was in effect from 1981 until 1985. The predictable result was an average increase in the price of Japanese cars by about $1,000 and of U.S. cars by about $370. Also, as a result of the import quotas, 26,000 new jobs were "created"
in the U.S. automobile industry. Refer to Situation 32-l. At the time the total yearly salary (including all the benefits) of the average auto worker was no more than $50,000 per year, and the cost per job saved was estimated at $160,000 per worker per year. We can conclude that A) import quotas are a cost-efficient way of saving jobs. B) the U.S. auto industry, through its lobbying efforts, managed to promote the general public interest. C) the net social benefits of import quotas were positive. D) all of the above E) none of the above
Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply?
(A) Both aggregate demand and aggregate supply will decrease, leading to lower real GDP. (B) Aggregate demand will decrease, lowering both real GDP and the price level. (C) Aggregate supply will decrease, raising the price level and lowering real GDP. (D) No change on aggregate demand and aggregate supply.