When the Fed engages in an open market purchase, the money supply ________ and the nominal interest rate ________.
A. increases; increases
B. decreases; increases D decreases; decreases
C. increases; decreases
Answer: C
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Which of the following represent expansionary fiscal policy?
A) an increase in marginal individual income tax rates B) an increase in average individual income tax rates C) a cut in corporate income tax rates D) a reduction in government spending
A ______________ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.
a. production function b. consumption function c. production possibilities table d. budget table
Why is there a resource cost associated with inflation?
A. because the existence of inflation discourages people from placing their savings in interest-bearing accounts, where it is needed to fund capital investment B. because most workers end up working fewer hours during periods of inflation C. because consumers, workers, and firms devote resources to protecting themselves from the financial costs of inflation D. because unemployment increases when there is inflation
A. the economy achieves its potential output
A. 15 percent. B. 33 percent. C. 25 percent. D. 40 percent.