Which of the following statements is true of the quantity theory of money?
A) The theory explains the relationship between growth in real GDP and changes in nominal interest rates.
B) The theory states that inflation will always be positive.
C) Predictions of the theory can be verified with data.
D) The theory is applicable only in the short run.
C
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If the Fed carries out an open market operation and sells U.S. government securities, the federal funds rate ________ and the quantity of reserves ________
A) falls; decreases B) rises; increases C) rises; decreases D) rises; does not change E) falls; increases
Changes in reserve requirements directly and immediately affect
A) the monetary base. B) banks' holdings of securities. C) the Fed's holdings of foreign exchange. D) the money multiplier.
All of the following are benefits of labor unions EXCEPT
A) unions reduce wage inequity. B) unions increase the stability of the workforce. C) unions give workers a political voice. D) unions maximize employment for all workers.
A favorable supply shock will shift short-run aggregate supply
a. left, making output rise. b. left, making output fall. c. right, making output rise. d. right, making output fall.