Assume that the price level is flexible both upward and downward and that the Fed's policy is to keep the price level from either rising or falling. If aggregate supply increases in the economy, the Fed:
A. will have to increase interest rates to keep the price level from falling.
B. will have to reduce the money supply to keep the price level from rising.
C. will have to increase the money supply to keep the price level from falling.
D. can keep the price level stable without altering the money supply or interest rate.
C. will have to increase the money supply to keep the price level from falling.
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Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 30 calzones would appear
A) along Tomaso's production possibilities frontier. B) inside Tomaso's production possibilities frontier. C) outside Tomaso's production possibilities frontier. D) at the horizontal intercept of Tomaso's production possibilities frontier.
Which of the following would be viewed as a common property problem?
A) Your property is burglarized. B) Vandals damage your property. C) People pick all of the flowers in a public park. D) To be safe you must lock your door at night.
Which of the following is an example of an adverse selection problem?
a. A customer purchases four apples, two of which are bruised. b. A card shop puts its Halloween merchandise on sale on November 1st. c. A young job applicant fails to reveal that she was fired from her last job because she was incompetent. d. A man rents a car and then drives it less carefully and fills it with cheaper gas than he would if he owned it.
You believe the dollars you have today will be accepted in the future in exchange for goods and services. Which function of money does this illustrate?