Contractionary monetary policy is achieved by:
A) decreasing the amount of bank reserves and lowering the federal funds rate.
B) decreasing the amount of bank reserves and raising the federal funds rate.
C) increasing the amount of bank reserves and lowering the federal funds rate.
D) increasing the amount of bank reserves and raising the federal funds rate.
B
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The Friedman—Phelps analysis suggests that there is a long-term relationship between
A) inflation and unemployment. B) cyclical inflation and structural unemployment. C) unanticipated inflation and cyclical unemployment. D) anticipated inflation and structural unemployment.
Mutual interdependence means that
A) all firms are price takers. B) each firm sets its own price based on its anticipated reaction by its competitors. C) all firms collaborate to establish one price. D) all firms are free to enter or leave the market.
When looking at the impact of a change in trade policy economists use consumer and producer surplus to look at the winners and losers. Free trade economists insist that
A. there are winners and losers, but that the loss to the losers is greater than the gain to the winners. B. there are winners and losers, but that the gain to the winners is greater than the loss to the losers. C. everyone loses. D. no one loses.
If the United States raises tariffs on foreign goods, it may achieve
A. Higher production possibilities. B. Greater profitability of import-competing firms. C. Higher efficiency in domestic production. D. Higher U.S. exports.