What effect does restrictive monetary policy have on short-term real interest rates?
a. Restrictive monetary policy tends to push short-term interest rates upward.
b. Restrictive monetary policy tends to push short-term interest rates downward.
c. The effect of restrictive monetary policy on short-term interest rates is unpredictable.
d. Restrictive monetary policy has no effect on short-term interest rates.
A
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Economics can decide
A. the appropriate trade-off between fairness and efficiency. B. which pricing arrangements are fair and which are unfair. C. whether a pricing decision will impose heavy inefficiency costs on society. D. All of the responses are correct.
If the demand for a product is said to be relatively inelastic, the "absolute" value of the elasticity coefficient will be
A) less than one. B) greater than one. C) equal to one. D) zero.
An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving
a. True b. False Indicate whether the statement is true or false
One lesson policymakers have learned, and which was evident from Japan's experience in 2002, is:
A. an intervention in the foreign exchange market is almost always effective if done on a regular basis. B. in order for foreign exchange interventions to work, they must be frequent and expected. C. an intervention in the foreign exchange market will not work unless accompanied by a change in the policy interest rate. D. for an intervention in the foreign exchange market to work, the interest rate must be held constant by the central bank.