The ability of the Federal Reserve to use monetary policy to affect economic variables such as real GDP ultimately depends upon its ability to affect
A) tax rates.
B) real interest rates.
C) nominal interest rates.
D) foreign exchange rates.
Answer: B
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Which statement is true of the market supply curve?
A. It is the horizontal summation of the upward sloping portion of the AVC function of all firms in the industry. B. One must know the marginal cost information of firms in order to construct a supply function. C. It is the vertical summation of all the individual supply curves. D. In perfect competition the slope of the curve is horizontal.
The income effect of a price change results in a
A) shift of the demand curve when income changes. B) movement along the demand curve due to a change in relative prices. C) shift of the demand curve due to a change in purchasing power brought about by the price change. D) movement along the demand curve due to a change in purchasing power brought about by the price change.
From an initial IS-LM equilibrium with a normally-sloped IS curve and a vertical LM curve, the money supply increases. A the new IS-LM equilibrium we have
A) higher income and a lower interest rate. B) higher income and an unchanged interest rate. C) an unchanged income and a lower interest rate. D) lower income and an unchanged interest rate. E) an unchanged income and a higher interest rate.
Which of the following is a typical attribute of a socialist country?
A. Taxes are very high, particularly on the wealthy classes. B. Cradle-to-grave security for its citizens. C. A large-scale redistribution of income program from the wealthy and well-to-do to the middle class, working, class and the poor. D. All of the choices are attributes of a socialist country.