What interest rate has been the focus of monetary policy?
What will be an ideal response?
The Federal Reserve has been targeting the Federal funds rate in recent years. For example, to stimulate the economy, the Fed can reduce the Federal funds rate. It achieves this objective using an expansionary monetary policy of buying government securities. This change in turn affects the Federal funds rate (the rate banks charge each other for overnight loans) and increases excess reserves at banks. The fall in the Federal fund rate in turn effects on the prime interest rate (the rate that banks charge their most credit-worthy customers), and other interest rates.
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If GDP grew 3% in 1970, 2.2% in 1971 and 2.5% in 1972 then, what is the average annual growth rate over this period?
A) 5% B) 4% C) 2.6% D) -2.2%
If the economy was about to enter an inflationary boom, which of the following would be the most appropriate policy?
a. A tax increase. b. A decrease in government spending. c. An increase in government spending. d. A tax decrease.
The increased participation of married women in the work force reflects the increasing opportunity cost of not working
Indicate whether the statement is true or false
How can market failure occur in the market for hybrid automobiles? What could the government try to do to improve the situation?