The public often overestimates the negative effects of inflation due to a focus on nominal rates of interest.
Answer the following statement true (T) or false (F)
True
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Assume that the Federal Reserve replaces the money stock with the interest rate as an intermediate target. Then,
a. the range for the target interest rate would be chosen to hit the inflation rate, unemployment rate, and growth rate of the economy. b. if the Treasury bill rate fell temporarily below the target range, the Open Market Desk would sell securities in the open market until the Treasury bill rate rose to the target range. c. if the Treasury bill rate rose above the target range, the Open Market Desk would purchase Treasury bills or other government securities. d. All of the above
When a price is presented in context to another, a firm is
A) discriminating. B) maximizing profits. C) marking up. D) framing.
If a currency is at a forward premium by as much as its interest rate is lower than the interest rate in the other country, covered interest parity holds.
Answer the following statement true (T) or false (F)
If Congress adjusted the U.S. tax system so that the MPC was reduced, the:
A. economy would become more inflation prone. B. economy would become less stable. C. stability of the economy would be unaffected. D. economy would become more stable.