When the interest rate is below the equilibrium level,
a. the quantity of money that the Federal Reserve has supplied exceeds the quantity of money that people want to hold.
b. people respond by selling interest-bearing bonds or by withdrawing money from interest-bearing bank accounts.
c. bond issuers and banks respond by lowering the interest rates they offer.
d. All of the above are correct.
b
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Certain countries remain backward because they nurture superstition and are suspicious of new technology. This argument is based on the:
A) geography hypothesis. B) location hypothesis. C) culture hypothesis. D) capital hypothesis.
The abbreviation "GDP" stands for
A) Gross Domestic Prices. B) General Domestic Prices. C) Gross Domestic Product. D) Great Domestic Prices. E) Government's Domestic Politics.
What is the effect of supply-side inflation on the short-run Phillips curve?
If inflation is 10% and the nominal interest rate equals 16.6% the real interest rate is equal to
A) 6.6%. B) 6%. C) -6.6%. D) zero.