In the short run, when the Fed raises the federal funds rate,
A) the real interest rate is unchanged so investment and consumption expenditure are not changed.
B) the real interest rate temporarily falls, thereby increasing investment and consumption expenditure.
C) the real interest rate temporarily increases, thereby decreasing investment and increasing consumption expenditure.
D) the real interest rate temporarily increases, thereby decreasing investment and consumption expenditure.
E) investment and consumption expenditure increase, thereby raising the real interest rate temporarily.
D
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Hughes and Cain (2011) ask: Who suffered from the tariff in the 19th century? What was their answer?
(a) the government (b) producers of import-competing goods (c) consumers (d) workers in import-competing industries
Income taxes tend to be favored over sales taxes _____
a. because of the excess burden on income taxes b. on the benefit principle c. on equity grounds d. as long as income as defined using the Haig-Simons definition
Theresa opens a 5-year CD for $1,000 that pays 2% interest compounded annually. What is the value of the CD at the end of the 5 years?
a. $1,104.08 b. $1,100.00 c. $1, 020.00 d. $1,220.10
Which of the following was a contributing factor to the rising default and foreclosure rates beginning in the latter half of 2006?
a. the increasing share of 30-year, fixed rate loans as a share of outstanding mortgages b. the rigid standards of rating agencies, such as Moody's and Standard and Poors, which limited the development of mortgage-backed securities c. the price-stability policies of the Federal Reserve during 1998-2008 d. the erosion of lending standards during the preceding decade