If changes in monetary policy are going to help stabilize the economy, they must
a. be expansionary.
b. be restrictive.
c. reduce the real rate of interest.
d. be properly timed.
e. stimulate aggregate demand.
D
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
According to the Taylor rule, what should the federal funds rate target be if inflation is 5%, the target rate of inflation is 2%, the equilibrium real federal funds rate is 2%,
full-employment real GDP is $9 trillion, and current real GDP is $8.55 trillion?
With a monopolist's outcome, consumer surplus is:
A. higher than that of a competitive market. B. lower than that of a competitive market. C. the same as that of a competitive market. D. Any of these is possible.
The Fed's low short-term interest rate policy from 2002-2004, along with housing regulations promoting low down-payment loans to sub-prime borrowers, encouraged
a. conventional 30-year, fixed rate mortgages which have relatively high default and foreclosure rates. b. conventional 30-year, fixed rate mortgages which have relatively low default and foreclosure rates. c. adjustable rate mortgages which have relatively low default and foreclosure rates. d. adjustable rate mortgages which have relatively high default and foreclosure rates.