The Keynesian mechanism through which monetary policy affects the price level, real GDP, and employment depends on the impact of the:
a. interest rate on savings.
b. inflation on investment.
c. interest rate on investment.
d. interest rate on bond prices.
c
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________ unemployment is short term, but ________ unemployment can last for longer periods because workers need time to acquire new skills
A) Cyclical; frictional B) Structural; seasonal C) Seasonal; frictional D) Frictional; structural
Answer the following questions true (T) or false (F)
1. The Fed can simultaneously reduce the inflation rate and stimulate growth through lowering interest rates. 2. A monetary policy target is a variable that the Fed can affect directly, which then affects one or more of the Fed's policy goals. 3. Ceteris paribus, an increase in the money supply will lower short-term interest rates.
The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5Q. What is the variable cost?
A) 200 B) 5Q C) 5 D) 5 + (200/Q) E) none of the above
If the reserve requirement is 20% and commercial bankers decide to hold additional excess reserves equal to 5% of any newly acquired checkable deposits, then the effective monetary multiplier for the banking system will be
A. 3. B. 4. C. 5. D. 6.