Use the following diagram to answer the next question.Assume the economy is initially on aggregate demand AD2. The Fed should ________.

A. raise the discount rate
B. buy bonds
C. lower the prime rate
D. increase the reserve requirement


Answer: B

Economics

You might also like to view...

The data in the above table show that when the price level is 120, if aggregate demand does not change then the

A) money wage rate will rise in the future. B) money wage rate will fall in the future. C) short-run aggregate supply curve will shift leftward. D) long-run aggregate supply curve will shift leftward.

Economics

The demand and supply functions for sweatshirts (the basic grey kind) are as follows:

Demand Supply Quantity Quantity Demanded Supplied Price (per period) Price (per period) $10 15,000 $10 22,000 9 15,500 9 19,000 8 16,000 8 16,000 7 16,500 7 13,000 6 17,000 6 10,000 5 17,500 5 7,000 4 18,000 4 4,000 3 18,500 3 1,000 2 19,000 2 0 a. Graph the demand and supply functions for sweatshirts and find the equilibrium price and quantity. b. What effect will an increase in the price of gym shoes (a complement) have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph. c. What effect will a wage increase for workers in the sweatshirt industry have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.

Economics

Which policy measure bans spinning?

A) Sarbanes-Oxley Act of 2002 B) Global Legal Settlement of 2002 C) Gramm-Leach-Bliley Act of 1999 D) Riegle-Neal Act of 1994

Economics

Refer to Figure 8.1. At the profit-maximizing level of output,

A) AVC is minimized. B) ATC is minimized. C) MC is minimized. D) total cost is minimized. E) no costs are minimized.

Economics