The most likely impact of an unanticipated increase in the money supply is
a. an increase in the real interest rate, which in turn stimulates investment and GDP.
b. a decrease in the real interest rate, which in turn stimulates investment and GDP.
c. a reduction in the general level of prices, which will increase the disposable income of households.
d. an improvement in technology, which will stimulate both output and employment.
B
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In the period 1965 through the 1970s, policymakers pursued ________ policies in order to achieve ________
A) expansionary; high employment B) expansionary; low inflation C) contractionary; high employment D) contractionary; low inflation
When the Fed decreases the money supply, interest rates
a. rise, causing velocity to fall. b. fall, causing velocity to fall. c. rise, causing velocity to rise. d. fall, causing velocity to rise.
The net value to the federal government of the bonds currently held in the Social Security Trust Fund is
a. approximately $1 trillion. b. now approaching $2 trillion. c. greater than $2.5 trillion. d. zero, because the federal government is both the payee and recipient of the interest and principal represented by these bonds.
According to the open-economy macroeconomic model, if the United States moved from a government budget deficit to a government budget surplus, U.S. real interest rates would increase and the real exchange rate of the U.S. dollar would appreciate
a. True b. False Indicate whether the statement is true or false