An advantage of monetary policy over fiscal policy is the:
A. decisions are made by experts who are independent of political pressures.
B. decisions are made by politicians, not experts in finance, banking, and monetary policy.
C. decision makers are under political pressures.
D. decision makers cannot change and enact policy quickly.
Answer: A
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Use the following graph to answer the next question.
If the price level is initially at P1, then the economy will adjust by:
A. reducing the price level. B. decreasing the GDP produced. C. increasing output produced. D. increasing the total output demanded.
What is the impact of an interest ceiling on bank deposits but not on loans?
At expiration, the value of an option:
A. is equal to the intrinsic value. B. is less than the intrinsic value. C. is equal to the time value of the option. D. is greater than the intrinsic value.
The _______ means that a higher price level leads to lower real wealth.
a. employment effect b. interest rate effect c. wealth effect d. foreign price effect