If the underground economy is sizable, then GDP will
What will be an ideal response?
understate the economy's performance
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How do RBC economists face the business cycle fact that inflation is procyclical?
A) They argue that even though inflation doesn't fit their theory, everything else does, and inflation is not important. B) They note that inflation would not be procyclical if monetary policy were conducted properly. C) They argue that inflation is procyclical only because monetary policy shocks are the main cause of business cycles. D) They use alternative statistical methods that suggest that inflation is countercyclical.
When money supply __________, the real rate of interest __________
A) increases; falls B) increases; rises C) decreases; rises D) increases; remains unchanged
The Federal Reserve
a. was created in 1913. b. is the U.S.'s central bank. c. has other duties in addition to controlling the money supply. d. All of the above are correct.
Which is not true of the Fed?
A. US central bank B. twin mandates of max employment and price stability C. OMO is its central tool D. totally centralized in DC E. responsible for monetary policy, bank regulation, and financial system stability