The Fed can increase the money supply by conducting open-market
a. sales or by raising the discount rate.
b. sales or by lowering the discount rate.
c. purchases or by raising the discount rate.
d. purchases or by lowering the discount rate.
d
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In the above figure, suppose the economy is initially on the demand for money curve MD1. What is the effect of an increase in real GDP?
A) The demand for money curve would shift rightward to MD2. B) The demand for money curve would shift leftward to MD0. C) There would be a movement upward along the demand for money curve MD1. D) There would be a movement downward along the demand for money curve MD1.
An unexpected fall in the Purchasing Managers' Index should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
Which of the following models depicts the role of money as affecting only the price level in the short run?
a. The new classical model b. The Keynesian model c. The real business cycle model d. The monetarist model
Recall that the Cobb-Douglas Utility function U(X,Y) = XaY1-a has the unusual property that the demand for each good depends only on its own price
Therefore, a consumer will always allocate the same proportion of income to each good. Specifically, the demand for X is X* = aI/px where I is income and px is the price of X. a. What is the price elasticity of demand for X? b. What is the direction of the income effect on X of an increase in px?