Refer to the figure below where the nominal interest rate equals 6% and the money supply equals 600. If the Federal Reserve wants to set the nominal interest rate at 4%, it must conduct open market ________ to set the money supply at ________. 
A. purchases; 200
B. sales; 800
C. sales; 200
D. purchases; 800
Answer: D
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Assume that all taxes are lump-sum, net exports = 0, and the marginal propensity to consume is 0.8. Then, if investment and taxes were each to fall by $100 million, the equilibrium level of income would
A) rise by $100 million. B) fall by $100 million. C) rise by $500 million. D) fall by $500 million.
Assuming that Pepsi-Cola and Coca-Cola are substitutes, a rise in the price of Pepsi-Cola, other things being equal, results in a(n):
a. upward movement along the demand curve for Coca-Cola. b. downward movement along the demand curve for Coca-Cola. c. leftward shift in the demand curve for Coca-Cola. d. rightward shift in the demand curve for Coca-Cola.
Government-run employment agencies and public training programs both seek to reduce frictional unemployment
a. True b. False Indicate whether the statement is true or false
Costs that are not obvious at the start of a project are
a. variable costs b. semivariable costs c. fixed costs d. indirect costs e. hidden costs