A ceiling on interest rates is likely to lead to
A. an increase in lending activity.
B. more rapid capital formation by business.
C. increases in hiring of labor.
D. a shortage of loanable funds.
Answer: D
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If an economy's actual GDP exceeds its potential GDP, _____
a. wages and prices must fall b. self-correcting forces will shift the SRAS curve to the left c. self-correcting forces will shift the AD curve to the left d. inflation will occur when AD shifts to the left e. unemployment is likely to be unusually high
What effect does the fixing of the nominal exchange rate have on the real exchange rate?
a. The real exchange rate is fixed at the same level. b. The nominal exchange rate is fixed, but the real exchange rate varies with relative income levels. c. The real exchange rate still fluctuates with relative international prices. d. None of the above.
The horizontal dotted line is
A. a price ceiling.
B. a price floor.
C. the price at which quantity supplied equals quantity demanded.
D. the equilibrium price for this graph.
The most important, most convenient, and most flexible way in which the Federal Reserve affects the supply of bank reserves is through:
A. changing interest rates. B. conducting open-market operations. C. changing bank reserve requirement ratios. D. changing the Federal Reserve discount rate.