If the Fed wishes to increase nominal interest rates, it must engage in an open market ________ of bonds that ________ the money supply.
A. sale; does not change
B. purchase; increases
C. sale; decreases
D. sale; increases
Answer: C
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The actual real interest rate and the expected real interest rate will be identical if
A) pe = p. B) pe > p. C) pe < p. D) none of the above
In deciding whether to operate in the short run, the firm must be concerned with the relationship between price of the output and
A) total cost. B) average variable cost. C) total fixed cost. D) the number of buyers.
The automatic stabilizers in the U.S. economy are sufficiently strong to prevent recessions
a. True b. False Indicate whether the statement is true or false
Flu shots provide a positive externality. Suppose that the market for vaccinations is perfectly competitive. Without government intervention in the vaccination market, which of the following statements is correct?
a. At the current output level, the marginal social benefit exceeds the marginal private benefit. b. The current output level is inefficiently low. c. A per-shot subsidy could turn an inefficient situation into an efficient one. d. All of the above are correct.