In the long run the real interest rate is determined by ________, and in the short-run the Federal Reserve can control the real interest rate by setting the nominal interest rate if inflation adjusts ________.
A. saving and investment; quickly
B. the Federal Reserve; slowly
C. saving and investment; slowly
D. the Federal Reserve; to equal the increase in the money supply
Answer: C
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When the demand for a good decreases, its equilibrium price ________ and equilibrium quantity ________
A) falls; increases B) falls; does not change C) rises; decreases D) rises; increases E) falls; decreases
The required reserve ratio is 20 percent and banks have no excess reserves. Katie deposits $300 in her bank. What are the bank's excess reserves immediately after Katie makes her deposit?
A) $30 B) $90 C) $240 D) $60 E) $300
"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run.". This observation helps to explain why many economists are skeptical about the
a. national-security argument. b. infant-industry argument. c. unfair-competition argument. d. jobs argument.
College education is an example of a positive externality.
A. True B. False C. Uncertain