If the Fed lowers the federal funds rate, which of the following will NOT happen?
A) The real interest rate falls.
B) Other short-term interest rates fall.
C) Aggregate demand increases.
D) Real GDP increases.
E) The price level falls.
E
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Examples of monopolistically competitive markets include the markets for
a. restaurants and furniture. b. wheat and corn. c. postage stamps and wooden pencils. d. All of the above are correct.
When looking at the impact of a change in trade policy economists use consumer and producer surplus to look at the winners and losers. Free trade economists insist that
A. there are winners and losers, but that the loss to the losers is greater than the gain to the winners. B. there are winners and losers, but that the gain to the winners is greater than the loss to the losers. C. everyone loses. D. no one loses.
The Fed changes the reserve requirement sparingly because:
A. sudden changes of such a huge magnitude would have far-reaching, and sometimes undesirable, effects. B. it would cause uncertainty for banks and slow their rate of lending. C. very small changes cause very large overall changes to money supply due to the money multiplier. D. All of these are true.
If the federal funds rate falls, economic growth is most likely to do what?
A. speed up B. show no change C. slow down