Suppose that the overnight interest rate falls to the lower bound and output is below potential output. A central bank could:
A. use its balance sheet to expand the monetary base.
B. seek to reduce expectations of future policy rates.
C. purchase securities of different maturities to affect their market prices and rates.
D. all of the answers given are correct.
Answer: B
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Have structural adjustment programs "worked"? What evidence would you look for to support your view?
What will be an ideal response?
Net entrants to the labor force is likely to be highest when the economy ________
A) is entering a recession B) nears the peak of an expansion C) has passed the peak of an expansion D) begins to recover from a recession
Diseconomies of scale:
a. occur only in the short run. b. occur when at least one resource is fixed and unit costs decrease as the quantity of production increases. c. occur when at least one resource is fixed and unit costs increase as the quantity of production increases. d. are represented by the upward-sloping portion of the short run average total cost curve. e. occur when all resources are variable and unit costs increase as the quantity of production increases.
The optimal time for the implementation of restrictive fiscal policy would be
a. before inflation accelerated. b. after inflation accelerated. c. during a recession. d. after the price level had risen significantly.