Which of the following statements about the ripple effects of monetary policy is FALSE? Monetary policy can
A) raise the federal funds rate, thereby decreasing the quantity of money, raising the real interest rate, and decreasing investment.
B) lower the federal funds rate, thereby increasing the supply of loanable funds, and lowering the exchange rate.
C) lower the federal funds rate, thereby lowering the real interest rate and increasing aggregate demand.
D) raise the federal funds rate and shift the aggregate demand curve leftward.
E) raise the federal funds rate, thereby raising the real interest rate and increasing potential GDP.
E
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Which of the following ideas is illustrated by the production possibilities curve [PPC]?
a. There are no limits on the total production feasible in an economy. b. An economy need not decrease the production of one commodity to increase the production of another. c. It is possible to satisfy unlimited wants in an economy through proper investment in research and development. d. When an economy chooses to produce a combination of goods and services, other combinations of goods and services are sacrificed. e. An economy can specialize in the production of only one good.
New classical economists say that a fully anticipated decrease in aggregate demand:
A. shifts the long-run aggregate supply curve to the right. B. shifts the long-run aggregate supply curve to the left. C. moves the economy down along its vertical long-run aggregate supply curve. D. eventually results in a self-correcting increase in aggregate demand.
Technical and organizational change
A) typically reduces prices by increasing the supply of the product, ceteris paribus. B) typically reduces prices by decreasing the demand for the product, ceteris paribus. C) typically increases prices by increasing the demand for the product, ceteris paribus. D) typically increases prices by decreasing the supply for the product, ceteris paribus.
Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?
A) never have to engage in trade with other nations B) increase the variety of products that it can produce with a decrease in resources C) consume a combination of goods that lies outside its own production possibilities frontier D) produce a combination of goods that lies outside its own production possibilities frontier