An indirect effect of monetary policy is that as the money supply
A. decreases, interest rates fall, and borrowing and spending increase.
B. decreases, interest rates rise, and borrowing and spending increase.
C. increases, interest rates fall, and borrowing and spending increase.
D. increases, interest rates rise, and borrowing and spending decrease.
Answer: C
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Refer to the figure below where the nominal interest rate equals 6% and the money supply equals 600. If the Federal Reserve wants to lower the interest rate to 4%, it must ________ the money supply to ________. 
A. increase; 1,000 B. increase; 800 C. decrease; 800 D. decrease; 400
The type of financial market where government and corporations can borrow money directly from savers is called:
a. a stock market b. a loanable funds market. c. a financial market. d. a bond market.
Which of the following occurs if government intervention forces the economy inside the production possibilities curve?
A. Market failure. B. Government failure. C. Income inequality. D. Externalities.
Monopolistic competition is associated with
A) product differentiation. B) price-taking behavior. C) explicit consideration at the firm level of the strategic impact of other firms' pricing decisions. D) high profit margins in the long run. E) increasing returns to scale.