Suppose the money demand curve shifts rightward. Which of the following is true about the alternative policy options available with the Fed?
a. The Fed can keep the interest rate from rising only if it increases the money supply
b. The Fed cannot prevent the interest rate from rising.
c. The Fed can prevent the interest rate from rising without changing the money supply.
d. If the Fed expands the money supply, the interest rate will rise even further.
e. The Fed should reduce the money supply if it plans to prevent the interest rate from rising.
a
You might also like to view...
Marginal cost a. Is the incremental cost incurred by producing an additional unit of output. b. Is the total cost of production
c. Is the total fixed cost of production. d. None of the above
Which of the following contributed to the soaring housing prices during 2002-2004?
What will be an ideal response?
Mutual interdependence means that each firm in an oligopoly:
A. Faces a perfectly inelastic demand for its product B. Considers the reactions of its rivals when it determines its pricing policy C. Depends on the other firms for its inputs D. Depends on the other firms for its markets
What leads thousands of profit seeking entrepreneurs to misread the signals of the market-price system?
A) Poor budget policy on behalf of government officials B) The globalization of the world economy C) An artificial lowering of interest rates D) A poor knowledge of the basic principles of supply and demand