Figure 33-8
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In Figure 33-8, which of the following points illustrate the expansionary monetary policies of the mid-1990s and the accompanying favorable supply shocks?
A. A to B to C
B. B to C to E
C. C to B to A
D. D to C to E
Answer: D
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An efficient solution to a pricing problem
a. makes both buyers and sellers better off than any other possible solution. b. may not be the socially "fair" solution. c. occurs when producers' total cost of production equals consumers' total utility from the output produced. d. maximizes the output of the good being priced.
If the unemployment rate falls below its long-run level, which policies would be appropriate to stabilize output?
a. increase the money supply, increase taxes b. increase the money supply, cut taxes c. decrease the money supply, increase taxes d. decrease the money supply, cut taxes
People hold less money and lend more and the interest rate falls when the price level
a) increases by more than 30 percent. b) remains constant. c) increases by less than 30 percent. d) decreases.
Suppose that interest rates are expected to remain unchanged over the next few years. However, there is a risk premium for longer-term bonds. According to the liquidity premium theory, the yield curve should be:
A. upward sloping and relatively flat. B. inverted. C. vertical. D. upward sloping and very steep.