In the liquidity preference framework, a one-time increase in the money supply results in a price level effect. The maximum impact of the price level effect on interest rates occurs
A) at the moment the price level hits its peak (stops rising) because both the price level and expected inflation effects are at work.
B) immediately after the price level begins to rise, because both the price level and expected inflation effects are at work.
C) at the moment the expected inflation rate hits its peak.
D) at the moment the inflation rate hits it peak.
A
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When the coupon rate on newly issued bonds ________ relative to older, outstanding bonds, the market price of the older bond ________
A) decreases; rises in the secondary market B) increases; falls in the primary market C) decreases; falls in the secondary market D) increases; falls in the secondary market
Differences in scientific judgment between economists are similar to all of the following except
a. astronomers debating whether the sun or earth was at the center of the solar system. b. meteorologists debating the existence of global warming. c. two politicians arguing about the fairness of the tax code. d. explorers debating whether or not the earth was flat before the time of Christopher Columbus.
Dummy variables are used in time-series forecasting models
A. to change the intercept of a regression in selected periods. B. to account for random variation in the data. C. to account for seasonal variation in the data. D. both a and b E. both a and c
When the president says that "Income inequality is a much more serious economic problem than high unemployment rates," it is an example of
A. an irrational argument. B. an empirically proven fact. C. a positive statement. D. a normative statement.