If there is a decrease in world oil prices and the Fed wishes to maintain output stability, what should it do?
a. Buy bonds in the open market.
b. All the economy to adjust itself.
c. Sell bonds in the open market.
d. Impose higher taxes to counteract the supply shock.
e. Lower taxes to maintain output.
C
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Suppose that a technological advancement substantially reduces the cost of laser eye surgery. This would cause the equilibrium
A) quantity of laser eye surgery to decrease. B) quantity of laser eye surgery to increase. C) price of technology to increase. D) quantity of technology to decrease.
The deregulation of U.S. banking in the 1980s led to: a. increased profits at all banks
b. no change in banks' conduct. c. more bank failures than in the 1930s. d. the insolvency and collapse of many banks as they began to hold riskier assets. e. the end of FDIC insurance for banks that held risky assets.
Full employment implies which of the following is reduced to zero?
A. Cyclical unemployment only B. Frictional unemployment only C. Frictional and structural unemployment only D. Frictional, structural, and cyclical unemployment
Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?
a. C+D b. A+B c. B+C d. A+B+C+D