Which is a basic proposition of supply-side economics?
A. The Federal Reserve should target the Federal funds rate rather than the money supply
B. Tax-hikes on business reduce productivity and output and reduce aggregate supply
C. Low marginal tax rates reduce incentives to work, saving, and investment
D. Transfer payments increase incentives to work
B. Tax-hikes on business reduce productivity and output and reduce aggregate supply
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When the Fed allows the monetary base to respond to the purchase or sale of domestic currency in the foreign exchange market, the process is called
A) open market operations. B) hedging. C) sterilized intervention. D) unsterilized intervention.
If goods X and Y are substitute goods, then an increase in the price of Y, other things being equal,
A) results in a decrease in the amounts of both X and Y consumed. B) decreases the quantity demanded of Y, but has no effect on the amount of X consumed. C) results in a decrease in the quantity of Y consumed, but increases the demand for X. D) has no real effect on the quantity demanded of good Y, but increases the demand for X.
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The real risk-free interest rate rises and monetary base rises. b. The real risk-free interest rate falls and monetary base falls. c. The real risk-free interest rate rises and monetary base falls. d. The real risk-free interest rate and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an example of a(n) (i) imperfectly competitive market. (ii) monopoly market. (iii) oligopoly market
a. (i) and (ii) only b. (ii) and (iii) only c. (i) and (iii) only d. (iii) only