If the Fed engages in open market sales in direct response to an increase in the rate of inflation, this is known as
A) direct policy making.
B) active policy making.
C) passive policy making.
D) fiscal policy making.
B
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Tom is stranded on a deserted island where he can only consume coconuts and crabs. Two of his indifference curves are in the figure above
a) Would Tom prefer his consumption to be at point a or at point b? At point b or at point c? Explain your answers. b) Between points a and b, what is Tom's marginal rate of substitution for a crab?
The inflation rate is the
a. absolute change in real GDP from one period to another. b. percentage change in real GDP from one period to another. c. absolute change in the price level from one period to another. d. percentage change in the price level from one period to another.
According to UIP, when interest rates are equal, the exchange rate of the country's home currency is expected to:
a. fall. b. remain constant. c. rise. d. Not enough information is provided to answer the question.
When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve
A. there will be pressures that will lead to a shift of either the aggregate demand or the long run aggregate supply curves. B. total planned real expenditure will be lower than actual real GDP, and the price level will increase. C. total planned real expenditures will exceed actual real GDP, and the price level will increase. D. there will be no price level change.