Capital goods are counted the same as consumer goods in the national product accounts.
Answer the following statement true (T) or false (F)
True
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The assumption that labor markets clear makes it very easy for the classical model to explain expansions
a. True b. False
An increase in the discount rate:
A. reduces the cost of reserves borrowed from the Fed. B. signals the Fed's desire to increase the money supply. C. signals the Fed's desire to lend increased reserves to banks. D. increases the cost of reserves borrowed from the Fed.
Suppose individuals expect that interest rates will increase in the future. Also assume that the Fed wants to prevent any change in current output. Given this goal of the Fed, the Fed should implement a policy in the current period that
A) shifts the IS curve rightward. B) shifts the IS curve leftward. C) shifts the IS curve leftward and the LM curve upward. D) shifts the LM curve upward. E) shifts the LM curve downward.
The aggregate supply curve tells us
A. what the effect of changes in interest rates will be on real GDP. B. the total amount of planned production in an economy. C. how changes in the price level affect the amount paid for all commodities. D. anything about the quantity demanded of all commodities and the price level.