Which of the following is an example of a contractionary monetary policy?
a. Reduction in the amount of transfer payments made to poor families
b. Purchase of U.S. government securities in the open market
c. Increase in the discount rate
d. Decrease in the required reserve ratio
e. Increase in the tax rate
c
You might also like to view...
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive
Indicate whether the statement is true or false
Refer to Figure 14-7. Uniguest, Inc is a company that provides PCs with internet access and touch-sensitive screens to hotels
Suppose the Hard Rock Hotel and Casino in Las Vegas informs Uniguest that it is considering installing these systems in its hotel rooms. The Hard Rock expects to be able to charge higher prices for these rooms if it installs Uniguest's systems in its rooms. The two companies begin bargaining over what price the Hard Rock will pay Uniguest for its systems, and the decision tree shown above illustrates this bargaining game. Note that the profit figures listed in the decision tree are additional profits for the Hard Rock and total profits for Uniguest. a. Suppose the Hard Rock offers Uniguest $1,200 per system. Will Uniguest accept or reject this offer? Why? b. Suppose the Hard Rock offers Uniguest $800 per system. Will Uniguest accept or reject this offer? Why? c. Suppose Uniguest attempts to obtain a favorable outcome from the bargaining by telling the Hard Rock it will reject an $800-per-system offer. If the Hard Rock does not believe the threat is credible, what will it do? Why? What will Uniguest do? Why? d. Is there a subgame-perfect equilibrium in this situation? Explain.
According to the liquidity premium theory, what does a flat yield curve indicate?
A) Short-term interest rates are expected to remain stable. B) Short-term interest rates are expected to rise. C) Short-term interest rates are expected to fall. D) Long-term interest rates are expected to fall.