Refer to the figure below where the nominal interest rate equals 6% and the money supply equals 600. If the Federal Reserve wants to lower the interest rate to 4%, it must ________ the money supply to ________. 
A. increase; 1,000
B. increase; 800
C. decrease; 800
D. decrease; 400
Answer: B
You might also like to view...
Frank Murphy is considering how many snowmobiles to purchase for his snowmobile rental business. Below are his estimates of the number of snowmobile rentals per year, depending on the number of snowmobiles available.Number ofSnowmobilesYearlyrentals1902170324043005350After paying all non-interest expenses, expenses Frank expects to net $10 per rental. Each snowmobile costs $15,000. How many snowmobiles should Frank purchase if the real interest rate is 5.5%?
A. 1. B. 0. C. 2. D. 4.
Kinks in budget constraints always produce non-convexities in choice sets.
Answer the following statement true (T) or false (F)
If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price
Indicate whether the statement is true or false
Which one of the following conclusions is not supported by the intertemporal substitution hypothesis?
A. Hours of work increase as the wage rises and decline as the wage falls. B. Hours of work over the life cycle will be inversely related to wages over the life cycle. C. An unemployed person might choose to become a discouraged worker during a low-wage recession with an eye toward returning to the labor market when wages increase. D. The profile of hours of work over the life cycle will have roughly the same shape as the age-earnings profile. E. A high wage worker may choose to work 60+ hours a week during her peak wage years in order to retire at a younger age later in life.