Keynesians believe in a relatively stable __________ curve, and thus recommend a monetary policy targeting the __________
A) IS; money supply
B) IS; interest rate
C) LM; money supply
D) LM; interest rate
D
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Suppose a worker signs a contract containing an 8 percent nominal wage increase with inflation expected to be 3 percent. Inflation turns out to be 6 percent, but the contract also contains 60 percent COLA protection
The worker's real wage under the contract A) falls by 1.2 percent. B) falls by 2.4 percent. C) rises by 3.8 percent. D) rises by 3.0 percent. E) rises by 1.8 percent.
If policymakers deem inflation as being too high, then the policy response should be monetary ________, which shifts aggregate demand______.
A. easing; a left B. easing; right C. tightening; left D. tightening; right
The Fed's mostly used tool for changing the size of the money supply is
A. its power to change the discount rate. B. its power to change legal minimum reserve requirements. C. open market operations. D. changing the size of the government budget deficit.
By changing its regulations, the Fed ___ force the banking system to increase the money supply; by changing its regulations, the Fed ____ force the banking system to decrease the money supply:
a. Can; can b. Can; cannot c. Cannot; can d. Cannot; cannot.