To achieve its target when the federal funds rate is below the Fed's target range, the Fed should:
A. do nothing.
B. follow expansionary policy.
C. follow contractionary policy.
D. print money.
Answer: C
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Which of the following would be considered a fiscal policy action?
A) Spending on the war in Afghanistan is increased to promote homeland security. B) Tax incentives are offered to encourage the purchase of fuel efficient cars. C) A tax cut is designed to stimulate spending during a recession. D) The Fed increases the money supply.
If output is increased in the long-run, average production costs in the presence of internal economies of scale will ________, and in the presence of external economies of scale, will ________
A) decrease; decrease B) increase; remain constant C) remain constant; increase D) decrease; remain constant E) increase; decrease
Which of the following implies a decline in labor productivity in an economy?
a. A high rate of growth in capital formation b. An improvement in input quality c. A decrease in the production of goods and services d. An increase in the budget surplus in the economy e. A decrease in the prices of goods and services
The usual situation in banking regarding asymmetric information is:
A. borrowers and lenders have the same information. B. lenders and borrowers have perfect information. C. borrowers know more than lenders. D. lenders know more than borrowers.