When the economy is already operating at nearly full capacity, further fiscal or monetary stimulus will likely:
a. soften inflationary pressures in sectors already at capacity, and increasing employment in sectors with excess capacity.
b. trigger inflationary pressures in sectors already at capacity, and decreasing employment in sectors with excess capacity.
c. soften inflationary pressures in sectors already at capacity, and decreasing employment in sectors with excess capacity.
d. trigger inflationary pressures in sectors already at capacity, and increasing employment in sectors with excess capacity.
d
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If banks borrowed from the Fed when the federal funds rate was below its target level
A) the supply of reserves would decrease and the federal funds rate could fall even further. B) the supply of reserves would increase and the federal funds rate would rise. C) the supply of reserves would decrease and the federal funds rate would rise. D) the supply of reserves would increase and the federal funds rate could fall even further.
As part of the "wealth channel of monetary policy," a higher money supply __________ bond prices and thus __________ spending
A) raises; raises consumption B) raises; raises investment C) lowers; lowers consumption D) lowers; lowers investment
The incentives to work that result from the existence of private property accrue to
A. neither the weak nor the strong. B. both the weak and the strong. C. only the strong. D. only the weak.
Describe a situation in which a one-way speculative gamble would be possible and explain the effects that this type of speculation would have on a country trying to maintain its fixed exchange rate.
What will be an ideal response?