As the price level falls
a. people will want to hold more money, so the interest rate rises.
b. people will want to hold more money, so the interest rate falls.
c. people will want to hold less money, so the interest rate falls.
d. people will want to hold less money, so the interest rate rises.
c
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Assume the exchange rate is 1 U.S. dollar equals 1.10 Canadian dollars. If purchasing power parity is correct, a DVD that has a price of $10 in Rochester, New York, in Canada has a price of ________ Canadian dollars
A) 10.00 B) 10.10 C) 11.00 D) 11.11 E) 9.09
The automobile industry in Richland has a Herfindahl-Hirschman Index of 5,600. This implies that the automobile industry in Richland is ________
A) dominated by a few buyers B) moderately concentrated C) highly concentrated D) perfectly competitive
The elasticity of output with respect to capital
A) is the increase in output resulting from an increase in the capital stock. B) is the percentage increase in output resulting from a 1 % increase in the capital stock. C) is always greater than one. D) is the inverse of the elasticity of output with respect to labor.
During the Great Recession that began in 2007, the Fed lowered interest rates to almost 0%. What did it do to accomplish this policy?
A) Decreased the money supply. B) Both choices 'a' and 'c'. C) Increased the money supply. D) Sold bonds on the open market.