The country is experiencing rapid inflation. What could the Fed do reduce the money supply and slow inflation?
a. buy government bonds
b. lower the reserve ratio
c. sell government bonds
d. lower the discount rate
c. sell government bonds
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Refer to the scenario above. The interest that you will earn, after a year, is equal to:
A) $10. B) $30. C) $32.24. D) $52.
Suppose the equilibrium interest rate in the money market is 5 percent and the current interest rate is 7 percent. As a result
A) the interest rate rises. B) real GDP increases. C) the demand for money curve shifts rightward. D) people buy bonds and the interest rate falls.
China, the last large communist society,
A. has proved that a command economy has far less pollution problems than capitalist economies. B. has urban smog levels higher than Los Angeles. C. has the world’s most sophisticated pollution-control devices. D. has lowered its level of pollution dramatically since 1980.
Which of the following leads to an increase in real GDP?
A) a decrease in the inflation rate in other countries relative to the inflation rate in the United States B) a decrease in interest rates C) a decrease in government spending D) Households have increasingly pessimistic expectations about future income.