The market interest rate is important to the investment decision of firms:
a. only when funds are borrowed from financial intermediaries.
b. only when firms have the money to invest in capital.
c. regardless of whether funds must be borrowed or firms have the funds on hand.
d. only when firms have funds on hand and are ready to lend them
e. only when firms purchase new equipment rather than a new building.
c
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If the central bank targets a monetary aggregate, it is likely to lose control over the interest rate because
A) of fluctuations in the demand for reserves. B) of fluctuations in the consumption function. C) bond values will tend to remain stable. D) of fluctuations in the business cycle.
Explain how discretionary monetary policy may have brought about the end of the Great Moderation and ushered in the Great Recession
What will be an ideal response?
The price elasticity of supply measures the responsiveness of quantity supplied to a change in ____________.
a. quantity demanded. b. demand c. price. d. supply.
A dramatic and sustained increase in oil prices would most likely:
A. increase demand-pull inflation. B. decrease demand-pull inflation. C. increase cost-push inflation. D. decrease cost-push inflation.