The Federal Reserve can succeed in reducing unemployment by increasing the money supply to stimulate spending. In which of the following scenarios would it most likely refrain from implementing that policy?
a. when there is a significant slowdown in the economy and the Federal Reserve does
not want to cause a shock
b. when the economy is close to full capacity and the Federal Reserve does not wish to
risk causing inflation
c. when unemployment is in the double digits and firms are resistant to hiring more
workers
d. when consumers seem resistant to spending because so many of them are out of
work
b. when the economy is close to full capacity and the Federal Reserve does not wish to
risk causing inflation
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
In the 1980s, a new category entitled ________ was added to M1
A) money market mutual fund deposits B) other checkable deposits C) demand deposits D) traveler's checks
Which of the following would shift the investment demand curve rightward?
a. Firms are operating their plants at less than full capacity. b. A decrease in the interest rate. c. A decrease in business taxes. d. All of the above. e. None of the above.
For quantity exchanged to decrease, but the price to rise, there must have been a(n)
a. increase in demand. b. decrease in demand. c. increase in supply d. decrease in supply.