As the financial crisis became more severe in 2008, the Federal Reserve undertook a(n) ________ of monetary policy, an effect of which is to ________ inflation
A) contraction; raise
B) easing; raise
C) contraction; lower
D) easing; lower
E) none of the above
B
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Most economists believe that price indices
A) understate inflation and understate growth in real GDP. B) understate inflation and understate growth in nominal GDP. C) overstate inflation and understate growth in real GDP. D) overstate inflation and understate growth in nominal GDP.
How is the quantity theory of money different from the quantity equation, and why must the quantity equation always be true?
What will be an ideal response?
In the current international monetary system, what is the role for gold?
a. The system is a gold-exchange standard, based on a fixed value for a key currency. b. Gold backs each currency, and therefore, the system as a whole. c. It serves as the principal reserve asset. d. It has no role.
An “optimally imperfect” decision is one that
A. is vaguely right instead of precisely wrong. B. recognizes that the decision could always be better if given more time. C. recognizes that the cost of additional information probably exceeds the potential gain from making a better decision. D. recognizes that any decision is imperfect because humans have limited intellectual capacities.