Most observers nowadays see monetary policy as much less important than fiscal policy
a. True
b. False
Indicate whether the statement is true or false
False
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If the Federal Reserve announces that its target for the federal funds rate is rising from 4 percent to 4.25 percent, how do you expect workers and firms to react?
A) If the Fed's announcement is not credible, workers and firms will not expect inflation to fall so they will reduce their consumption and investment spending, which will increase aggregate demand and reduce inflation. B) As long as the Fed's announcement is credible, workers and firms will reduce their consumption and investment spending, which will reduce aggregate demand and reduce inflation. C) As long as the Fed's announcement is credible, workers and firms will increase their consumption and investment spending, which will increase aggregate demand and inflation. D) Workers and firms will incorporate the increase in interest rates into their expectations of inflation, and they will expect inflation to rise as a result of Fed's policy announcement.
If the Fed decreases the monetary base by $100 million and the money multiplier is 4, M1 will
A) rise by $400 million. B) fall by $400 million. C) rise by $25 million. D) fall by $25 million.
Which of the following activities is not counted in our calculations of GDP?
a. the purchase of a hammer for household repairs b. the labor services of a volunteer group building a home for a poor widow c. the purchase of new, domestically-produced tires for your old foreign car d. a haircut received and paid for at a beauty salon
If consuming more of a good doesn't affect a consumer's well-being, then:
A. the marginal utility of the good is positive. B. the marginal utility the good is negative. C. the marginal utility the good is constant. D. the marginal utility the good is zero.