Suppose an expansionary monetary policy reduces nominal interest rates. If this is the case, it follows that the expansionary monetary policy must have:
A. increased expected inflation.
B. reduced expected inflation.
C. increased expected inflation less than it reduced real interest rates.
D. reduced real interest rates less than it increased expected inflation.
Answer: C
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Each of the following is a determinant of demand except a. tastes
b. production technology. c. expectations. d. the prices of related goods.
Two variables that affect the slope of the aggregate demand curve are
a. government purchases and real taxes. b. tax rates and interest rates. c. government purchases and interest rates. d. exchange rates and income rates.
When economists assume that people are rational, they assume that
a. consumers maximize profits. b. firms maximize revenues. c. consumers maximize utility. d. firms maximize output.
The official unemployment rate:
A) is the percentage of the labour force which is working part-time. B) is the percentage of the labour force which is unemployed. C) is the percentage of the total population which is not working. D) reveals people over 21 years of age who are currently discouraged and are not looking for a job.