The money supply is very sensitive to changes in the rate of interest
a. True
b. False
Indicate whether the statement is true or false
False
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To keep employees from shirking, invest in greater monitoring
a. when monitoring is expensive relative to its benefits b. especially when monitoring is not very efficient c. when employees fail to respond to incentive contracts d. when incentives solve both moral hazard and adverse selection problems with employees
To satisfy the admission criteria to the European Union, a country must meet all of the following, EXCEPT:
A) maintain an inflation that is equal to the average of the three lowest rates. B) maintain long-term interest rates equal to that of the three countries with the lowest inflation rates. C) maintain a pegged exchange rate, without any revision for two years. D) cut down taxes to the lowest possible level.
Automatic stabilizers create ________ during recessions from increased government spending on welfare and unemployment insurance, and reduced tax revenues, and create _________ during peak growth periods of the economy from reduced government welfare spending and increased tax revenues.
A. fiscal stimulus, fiscal contraction B. fiscal stimulus, fiscal stimulus C. fiscal contraction, fiscal stimulus D. fiscal contraction, fiscal contraction
Explain what types of policies a central bank can implement to raise the interest rate
What will be an ideal response?