If the Fed shifts to a more restrictive monetary policy in order to help control inflation, the policy shift will generally
a. stimulate aggregate demand and real output as soon as the policy is instituted.
b. reduce aggregate demand immediately and quickly bring the inflation under control.
c. reduce aggregate demand and help bring the inflation under control, but the primary effects may not be felt for several months (or quarters).
d. lower real interest rates in the short run, but in the long run, real interest rates will rise.
C
You might also like to view...
One reason why property rights help achieve an efficient level of pollution is because property rights
A) force the marginal private cost to equal the marginal social cost. B) force the marginal social cost to zero. C) force the marginal external cost to a lower level than marginal private cost. D) eliminate marginal private costs. E) change the marginal external cost so that they are equal to the marginal social benefit.
When an entrepreneur invests his own financial capital in order to start a business
A) the opportunity cost of capital should be included in the economic cost of doing business. B) the investment is treated as a fixed cost, so it should not be considered as a cost of doing business. C) the firm's economic profits will exceed its accounting profits. D) the accounting costs increase because the funds would otherwise have to be borrowed.
Twelve Federal Reserve Districts operate independently but with supervision
What will be an ideal response?
The difference between the total amount that people would have been willing to pay for the total quantity produced and consumed in a market and what they actually pay at the market clearing price is called
A) production excess. B) excess demand. C) market surplus. D) consumer surplus.