The indirect effect of an increase in the money supply is to
A. lower interest rates, which stimulates both investment and consumption spending.
B. pay off a portion of the public debt.
C. put more cash in people's pockets, thereby increasing aggregate demand.
D. raise interest rates so people will save more.
Answer: A
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Economists might be willing to accept a policy that adversely affected distribution of income if it
a. lessened income disparities. b. diminished labor productivity by a large amount. c. increased productivity by a large amount. d. were favorable to the rich.
Some economists argue that the Fed set its federal funds rate target "too _________" in the early 2000s, which was one of the contributing factors which led to ____________ mortgage interest rates and a(n) ___________ housing prices
A) low; low; increase B) low; low; decline C) high; high; decline D) high; high; increase
Suppose the government imposes a small carbon tax on automakers. But the price of gasoline has doubled due to a Middle East crisis which has reduced oil production. In the market for autos, these changes mean that supply and demand have both changed with the effect on the demand larger than the effect on the supply. The result is that the price of autos will ________ and the number of autos sold will ________
Fill in the blank(s) with correct word.
Which of the following does not explain why the Glass-Steagall regulations lost their effectiveness?
A. Over time, nonbank financial firms were able to borrow directly from the public, rather than having to borrow from commercial banks. B. With the advent of new financial instruments, regulated banks lost business to unregulated institutions, and credit began to flow through unregulated systems. C. As regulations became too successful, people wanted to eliminate these regulations in order to pursue the magic of the free market. D. The Federal Reserve created regulations that ran counter to what the government was trying to do.