In the hard-landing scenario the ability of the Fed to respond
a. is unlimited
b. is constrained because their inclination to raise interest rates would further compound the value of the dollar problem.
c. is constrained because their inclination to lower interest rates would further compound the value of the dollar problem.
d. limited because the resulting boom would run out of control.
e. is constrained because their inclination to lower taxes would depress tax revenues.
C
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Suppose a glass of orange juice has a price of $2 and a glass of soft drink has a price of $1 . If the consumer is maximizing utility,
a. juice must have higher MU than soda drink b. the soft drink must have higher MU than juice c. both must have equal MU d. consumers would buy more soda drink than orange juice e. the consumer would buy twice as much orange juice as soft drink
Say that Japanese firms commit to avoid laying off their employees when demand for their products is low, but American firms often lay off workers when demand is low. As a result, ceteris paribus, we would expect Japanese firms to: a. face more elastic demand curves than American firms
b. have relatively greater variable costs than American firms. c. continue to produce at some prices at which American firms would shut down. d. shut down at prices at which American firms would continue to operate.
The most responsive to interest rate changes is the _______ demand for money.
A. transactions B. precautionary C. speculative
Which of the following is a normative statement?
A. A decrease in price leads to an increase in quantity consumed. B. Incomes grow more rapidly in high-tax states than low-tax states. C. People would be better off if government expenditures were higher. D. People will buy less butter at $1.50 per pound than they will at $1 per pound.