Suppose the Federal Reserve wanted to fight inflation by increasing interest rates. Doing so would
A. decrease aggregate supply.
B. decrease aggregate demand.
C. increase aggregate supply.
D. increase aggregate demand.
Answer: B
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The Federal Reserve uses dynamic open market operations to
A) alter the money multiplier. B) alter the growth path of bank reserves. C) inject reserves temporarily into the system. D) take reserves temporarily from the system.
The above figure shows the short run cost curves for a typical firm in a competitive market. If price = 4, then the firm
A) is earning positive profits. B) should produce 35 units. C) should shut down. D) None of above.
Mid-1960s amendments to the Social Security Act created
a. managed care. b. Medicare and Medicaid. c. major medical insurance. d. Blue Cross and Blue Shield. e. tax exemptions for health insurance as an employee benefit.
When economists say that the demand for a product has decreased, they mean that:
a. The product has become particularly scarce for some reason b. The demand curve has shifted to the left c. Consumers are now willing and able to purchase more of this product at each possible price d. The product price has increased and as a consequence consumers are buying less of the product