Easy monetary policy reduces the real interest rate, which ________ the demand for dollars, ________ the supply of dollars, and ________ the equilibrium value of the dollar.
A. decreases; increases; decreases
B. increases; increases; increases
C. increases; decreases; increases
D. decreases; decreases; decreases
Answer: A
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If the Fed wishes to increase the money supply then it should:
a. increase the required reserve ratio. b. increase the discount rate. c. buy government securities on the open market. d. do any of these.
Suppose we insert $1 in the circular flow economy. If the $1 moves around in the same direction, which answer represents a possible sequence of items purchased or rented?
a. land, labor, capital, entrepreneurship b. land, services, labor, capital c. goods, labor, services, capital d. goods, labor, capital, services e. labor, capital, labor, rent
Based on this model, it is apparent that there is a
Use thefollowing information for any or all of Questions 16 through 18. Suppose the marginal benefits and marginal costs of tire production in the U.S. are modeled as follows, where Q is in millions: MSB = 12 – 0.4Q MPB = 12 – 0.3Q MSC = MPC = 2 + 0.1Q a. negative production externality b. positive external benefit c. consumption externality measured as MEB = – 0.1Q d. negatively sloped MEC function
Suppose the MPC in the economy in Figure 10.2 equals 0.8 and the shift from AD0 to AD1 was caused by a decrease in investment of $30 billion. What will the total decrease in aggregate demand be (i.e., AD0 to AD2) as a result of the initial $30 billion decrease?
A. $240 billion. B. $150 billion. C. $37.5 billion. D. $130 billion.