The interest rate is the price borrowers pay to borrow money. Key interest rates are controlled by the Federal Reserve System. If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to
A. increase.
B. decrease.
C. not change.
D. be influenced by the interest rate, but with an uncertain effect.
Answer: C
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List four of the Federal Reserve's key functions
What will be an ideal response?
Which of these changes is observed in an economy when a recessionary gap is closed in the long run?
a. An increase in the inflation rate and a decrease in the unemployment rate b. An increase in the level of output and a decrease in the price level c. An increase in both the rate of output and the price level d. A decrease in both the rate of output and the price level e. A decrease in the inflation rate and an increase in the unemployment rate
Potential GDP is an estimate of the economy’s ability to produce goods and services if the
A. labor force is fully employed. B. price level is stable. C. trade balance is zero. D. federal budget is balanced.
Which statement is true?
A. The U.S. is both the world's leading creditor nation and the leading debtor nation. B. The U.S. is neither the world's leading creditor nation nor the world's leading debtor nation. C. The U.S. is the world's leading creditor nation and not the world's leading debtor nation. D. The U.S. is the world's leading debtor nation and not the world's leading creditor nation.