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.
D
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The aggregate demand curve shows that, if other factors are held constant, a
A) higher price level results in a decrease in the quantity of real GDP demanded. B) higher price level results in an increase in the quantity of real GDP demanded. C) higher price level results in a lower interest rate. D) lower price level results in a higher interest rate.
For the U.S. economy, which of the following helps explain the slope of the aggregate-demand curve?
a. An increase in the price level decreases the interest rate. b. An increase in the price level increases the interest rate. c. An increase in the money supply decreases the interest rate. d. An increase in the money supply increases the interest rate.
Using the multiplier effect, if the government increases purchases of transportation equipment by a certain amount, then total purchases for the economy will ______.
a. decrease by that amount b. also increase by that amount c. increase by more than that amount d. decrease by more than that amount
Use the following graph of the demand for noodles to answer the question below.
Refer to the three demand curves for noodles and assume noodles are an inferior good. Which of the following would shift the demand for noodles from D1 to D2?
A. an increase in consumer incomes B. a decrease in consumer incomes C. a decrease in the price of noodles D. an increase in the price of noodles