If the Fed's monetary policy reaction function does not change, then when inflation increases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.
A. increasing; increases; increases
B. increasing; increases; decreases
C. decreasing; decreases; decreases
D. increasing; decreases; decreases
Answer: D
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Public saving is negative when:
A. there is a government budget deficit. B. after-tax income of households and businesses is greater than consumption expenditures. C. the government's budget is balanced. D. there is a government budget surplus.
Even when a particular monetary asset is not performing one of the functions of money well, people still use the asset because
A) once an asset is defined as money it is always money. B) people expect money will come back at a later date. C) they have no choice. D) it is still easier than relying on barter.
When the economy is in recession, does the Fed want to raise the federal funds rate so as to increase aggregate demand and increase real GDP? Explain your answer
What will be an ideal response?
As of 2012, mortgage-backed securities made up approximately what portion of securities held by a bank?
A) 5% B) 20% C) 50% D) 70%