If a central bank were required to target inflation at zero, then when there was an unanticipated decrease in aggregate demand the central bank
a. would have to increase the money supply. This would move unemployment closer to the natural rate.
b. would have to increase the money supply. This would move unemployment further from the natural rate.
c. would have to decrease the money supply. This would move unemployment closer to the natural rate.
d. would have to decrease the money supply. This would move unemployment further from the natural rate.
a
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The significantly high rates of inflation in the 1970s occurred, in part,
A. because of increased petroleum prices. B. due to high unemployment. C. despite falling gasoline prices. D. due to restrictive monetary policies.
What is an advantage of using options instead of forward contracts when speculating on exchange rates?
What will be an ideal response?
Government-backed deposit insurance increases the ________
A) Willamette torsion effect B) adverse selection problem C) moral hazard problem D) the prudential contagion problem
Flour is an input used to produce bread. Suppose that the price of flour rises. As a result
A. the supply curve for flour will shift to the right. B. the supply curve for bread will shift to the left. C. the supply curve for bread will shift to the right. D. the supply curve for flour will shift to the left.