If there is a large increase in the price of oil and the Fed wishes to maintain stable output, which of the following should it do?
a. Do nothing, because the self-correcting mechanism will adjust the economy
b. Sell bonds in the open market
c. Wait, because output seldom changes when there is an increase in the price of oil
d. Encourage firms to not adjust the wages they pay
e. Buy bonds in the open market
E
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For the most part, central bank credibility, or lack thereof, is reflected in the behavior of ________
A) short-run aggregate supply B) short-run aggregate demand C) long-run aggregate supply D) aggregate price shocks
Solow residuals are estimates of ________
A) deadweight loss B) the natural rate of unemployment C) aggregate productivity D) labor hoarding
Which of the Ten Principles of Economics does welfare economics explain more fully?
a. The cost of something is what you give up to get it. b. Markets are usually a good way to organize economic activity. c. Trade can make everyone better off. d. A country's standard of living depends on its ability to produce goods and services.
Answer the following statements true (T) or false (F)
1) The Fed increases interest rates mainly by selling government securities. 2) Ben Bernanke is the current (2013) chair of the Board of Governors. 3) A change in the reserve ratio will affect both the amount of the banking system's excess reserves and the multiple by which the system can lend on the basis of excess reserves. 4) The federal funds rate target is the most frequently used monetary policy tool.