When the Fed engages in an open market sale, the money supply ________ and the nominal interest rate ________.
A. decreases; decreases
B. increases; increases
C. decreases; increases
D. increases; decreases
Answer: C
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In the 1979-82 period, the Fed pursued a monetary policy which targeted the growth rate of the money supply. Given the effects of financial deregulation on money demand you would expect, ceteris paribus,
A) stable interest rates. B) volatile interest rates. C) a constant interest rate. D) slow growth in interest rates.
If the agent has more information than the principal and there is only one state of nature, then
A) efficiency in both production and risk-bearing can be achieved. B) only efficiency in production can be achieved. C) only efficiency in risk-bearing can be achieved. D) neither efficiency in production nor efficiency in risk-bearing can be achieved.
The Asian financial crisis was brought about by:
A. debt crisis. B. exchange rate crisis. C. excessive loss of national resources. D. None of these statements is true.
Which of the following is a positive, as opposed to a normative, statement?
a. The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers. b. Antitrust laws should be used to prevent further concentration in the wireless telephone service market. c. The US Department of Justice sued AT&T to block its merger with T-Mobile. d. The wireless telephone service market is too highly concentrated.