You have the assignment of making a recommendation to the Chairman of the Fed during a period of persistent, high inflation. What could you do to restore stable prices? What would you recommend instead if the problem was persistent high unemployment?
In order to restore price stability (i.e., lower the rate of inflation) you could (1) sell government securities, (2) raise reserve requirements on bank deposits, (3) raise the discount rate, and/or (4) increase the interest rate the Fed pays on bank reserves.. You could also try to use moral suasion and urge banks to be more selective in making loans. This is all contractionary monetary policy. If the problem was persistent high unemployment, you would want to use expansionsary policy, which would reverse your policy recommendations--(1) buy government securities, (2) lower reserve requirements on bank deposits, (3) lower the discount rate, and/or (4) decrease the interest rate the Fed pays on bank reserves..
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From a macroeconomic perspective, the problem of low household saving has probably been overstated because:
A. household saving represents a smaller share of national saving than does public saving. B. it is national saving, not household saving, that allows an economy to accumulate new capital. C. household saving is not related at all to an economy's ability to accumulate new capital. D. household saving has been increasing steadily over the last three decades.
Which of the following statements explains why monopolies weaken the functioning of the invisible hand?
A) A monopoly is a price taker. B) The quantity produced by a monopoly is too low. C) Monopolies face an upward sloping demand curve. D) A monopoly sets the price of its good below marginal costs.
National income
a. includes gross private domestic investment b. is the sum of all payments made to resource owners for the use of their resources in production c. includes all consumption expenditures d. is measured by C + I + G + (X – M) e. does not include proprietors' income
Demand is said to be inelastic if
a. buyers respond substantially to changes in the price of the good. b. demand shifts only slightly when the price of the good changes. c. the quantity demanded changes only slightly when the price of the good changes. d. the price of the good responds only slightly to changes in demand.