Answer the following statements true (T) or false (F)
1) Operation Twist was aimed at lowering long-term interest rates.
2) Other things equal, an expansionary monetary policy will shift the economy's aggregate
demand curve to the right.
3) A restrictive monetary policy may be frustrated if the investment-demand curve shifts to the
left.
4) A restrictive monetary policy reduces investment spending and shifts the economy's aggregate
demand curve to the right.
1) T
2) T
3) F
4) F
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Suppose that an economy's labor became more productive between year 1 and year 2. We could conclude that this economy's
A. real GDP remained constant. B. production possibilities frontier shifted outward. C. production possibilities frontier shifted inward. D. capital stock increased by 3%.
At the beginning of 2015, a country is at full-employment. During 2015, oil-producing countries decrease oil production leading to much higher oil prices. The higher oil prices can
A) increase aggregate demand and lead to an expansion. B) increase aggregate supply and lead to an expansion. C) decrease aggregate demand and lead to a stagflation. D) decrease aggregate supply and lead to a stagflation. E) decrease aggregate demand and lead to a higher price level.
Which of the following conditions could lead to an inefficient quantity of pretzels being produced?
A) the existence of many producers of pretzels B) the existence of many consumers of pretzels C) the existence of a single producer and seller of pretzels D) All of the above conditions could cause the actual quantity of pretzels to be an inefficient quantity.
When the absolute price elasticity of demand is greater than 1, demand is
A) elastic. B) unit-elastic. C) inelastic. D) undetermined without more information.