If the central bank is facing the zero bound constraint and announces a higher inflation target,
A) the real interest rate will increase, which will decrease aggregate expenditure.
B) the real interest rate will decrease, which will increase aggregate expenditure.
C) the nominal interest rate will increase, which will decrease aggregate expenditure.
D) the nominal interest rate will decrease, which will increase aggregate expenditure.
B
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When comparing the velocity of M2 (V2), with the velocity of M1 (V1), the evidence suggests that V2 has been __________ and V1 has been __________ over time
A) relatively predictable; relatively predictable B) relatively predictable; relatively unpredictable C) relatively unpredictable; relatively predictable D) relatively unpredictable; relatively unpredictable
Which combination of assets represents the most diversification?
A) holding corporate and Treasury bonds B) holding shares of Google and Yahoo C) holding shares of Google and Microsoft D) holding shares of Google along with Treasury bonds
A possible outcome of the multilateral approach to free trade is that such an approach can
a. win political support when a unilateral approach cannot. b. result in more restricted trade than under a unilateral approach, when international negotiations fail. c. result in drastic reductions in tariffs for many countries. d. All of the above are correct.
Based on the long-run Phillips curve, we can conclude that expected inflation plays:
A. a minor role in determining inflation. B. an uncertain role in determining inflation. C. an important role in determining inflation. D. no role in determining inflation.