In the money market, an excess supply of money is equivalent to an excess supply of bonds
Indicate whether the statement is true or false
FALSE
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Suppose Starbucks currently charges $2.50 per cup for its latte
If Starbucks raises the price to $3.00 per cup, based on the demand curve in the figure above, its total revenue will ________ because the demand for Starbucks latte is ________ over this price range. A) increase; elastic B) decrease; elastic C) increase; inelastic D) increase; unit elastic E) not change; unit elastic
Everything else held constant, a change in workers' expectations about inflation will cause ________ to change
A) aggregate demand B) short-run aggregate supply C) the production function D) long-run aggregate supply
Cost pull inflation occurs when the:
A. price of a key input increases suddenly. B. price level changes in response to changes in the business cycle. C. price of necessity goods increases suddenly. D. business cycle becomes sporadic and unpredictable.
Bank lending and deposits tend to change as interest rates change. Can the Fed counteract this tendency?
A. Yes, through its ability to affect the money supply. B. Yes, through its ability to change tax levels. C. No, the Fed is forbidden by the Constitution from intervening in the economy. D. No, the Fed almost always follows a passive monetary policy.