During the Christmas shopping season, the demand for money increases significantly. If the Fed takes no actions to offset the increase in money demand, then nominal interest rates will:
A. equal the real interest rates.
B. increase.
C. remain constant.
D. decrease.
Answer: B
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Supply-side economists argue that less government spending:
a. will contract the productive side of the economy. b. will result in more crowding out. c. causes higher rates of unemployment and inflation. d. would cause interest rates to increase dramatically. e. would make more investment capital available at lower rates of interest to the private sector.
When output is greater than the economy's long-run capacity, which of the following is most likely to occur?
a. a reduction in the general level of prices b. an abnormally high rate of unemployment c. increases in real interest rates and real resource prices d. a reduction in imports
Suppose the government of New Country has fixed the value of its currency, the New Peso, at $1 per New Peso, but the market equilibrium value of the New Peso is $0.50 per New Peso. In order to maintain the official value of the New Peso the Central Bank of New Country must either ________ domestic interest rates, or ________the supply of international reserves by purchasing New Pesos
A. lower; decrease B. raise; decrease C. raise; increase D. lower; increase
This graph demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.
According to the graph shown, the amount of surplus enjoyed by domestic consumers with free trade before the tariff is area:
A. ABCDEFGHIJKL B. ABCDEFG C. ABC D. A