With respect to consumer behavior, the interest-rate channel of monetary policy transmission appears to be:
A. strong because people's decisions to purchase cars or houses depend on the short-term rates that policymakers can change.
B. strong because it affects both spending and saving decisions.
C. weak because people's decisions to purchase cars or houses depend more on short-term rates rather than long-term rates.
D. weak because people's decisions to purchase cars or houses depend more on long-term rates rather than short-term rates.
Answer: D
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a. True b. False Indicate whether the statement is true or false
The optimal time for the implementation of restrictive fiscal policy would be
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Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.Employee-Hours Per DayOutput Per Day0014048091201516023200 When the firm uses 9 employee-hours per day, its total cost each day is:
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