The Federal Reserve Bank can ________ and the government can ________ to stimulate aggregate demand in the economy.
A. lower interest rates; increase spending
B. lower interest rates; decrease spending
C. increase interest rates; decrease spending
D. increase interest rates; increase spending
Answer: A
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Assume product A is an input in the production of product B. In turn product B is a complement to product C. We can expect a decrease in the price of A to:
A. decrease the supply of B and decrease the demand for C. B. increase the supply of B and increase the demand for C. C. decrease the supply of B and increase the demand for C. D. increase the supply of B and decrease the demand for C.
Countries are unlikely to maintain fixed exchange rates for long periods of time because:
A. fixed exchange rates eventually produce very high levels of inflation. B. fixed exchange rates impede a nation's ability to use monetary and fiscal policy to pursue domestic macroeconomic goals. C. fixed exchange rates promote domestic macroeconomic goals at the expense of international macroeconomic goals. D. they lack the tools to do so.
When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.
A profit?maximizing firm in a monopolistically competitive market structure behaves much like a ________ in the short run.
A. dominant firm B. monopolistic firm C. Cournot duopolist D. perfectly competitive firm