Suppose two variables are directly related. If one variable rises, then the other variable:
A. also rises.
B. falls.
C. remains unchanged.
D. reacts unpredictably.
Answer: A
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If the Fed fears inflation, then the Fed
A) directs banks to raise the nominal interest rate. B) will increase the income tax rate on interest income. C) directs banks to lower the nominal interest rate. D) will sell government securities in the open market. E) will buy government securities in the open market.
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of domestic producer surplus?
A) $0 B) $40 C) $320 D) $360
If the Fed sells securities worth $10 million to a commercial bank, the Fed's balance sheet will show
A) an increase in securities held of $10 million and an increase in bank reserves of $10 million. B) an increase in securities held of $10 million and a decrease in bank reserves of $10 million. C) a decrease in securities held of $10 million and an increase in bank reserves of $10 million. D) a decrease in securities held of $10 million and a decrease in bank reserves of $10 million.
A deficit country, like Argentina in 2001, must follow restrictive monetary and fiscal policy in order to maintain a fixed exchange rate
a. True b. False Indicate whether the statement is true or false