Suppose the government decided to tighten monetary policy and decrease government expenditures. In the short run in the Keynesian model, the effect of these policies would be to ________ the real interest rate and ________ the level of output.
A. lower; have an ambiguous effect on
B. raise; decrease
C. lower; decrease
D. have an ambiguous effect on; decrease
Answer: D
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The CPI was 225 in 2008 and 232.2 in 2009. The nominal interest rate during this period was 1.4 percent. What was the real interest rate during this period?
A) 4.6 percent B) -1.8 percent C) -3.2 percent D) 3.2 percent E) 1.8 percent
The difference between the marginal social cost and the private cost of a common property resource represents:
A) the social discount rate. B) a deadweight loss. C) is generally negative because the people who use the resources assign higher value to them than other members of society. D) the opportunity cost of reducing the resource by one unit for other members of society.
If on Tuesday you can buy 125 yen per U.S. dollar and on Wednesday you can buy 120 yen per U.S. dollar,
a. both the U.S. dollar and the yen have appreciated b. both the U.S. dollar and the yen have depreciated c. the U.S. dollar has appreciated and the yen has depreciated d. the U.S. dollar has depreciated and the yen has appreciated e. the yen has appreciated and the U.S. dollar has remained constant
Considering changes to the monetary base, are discount loans and federal funds borrowing equivalent? Explain.
What will be an ideal response?