Assume the demand for money curve is stationary and the Fed increases the money supply. The result is that people a. increase the supply of bonds, thus driving up the interest rate.b. increase the supply of bonds, thus driving down the interest rate.c. increase the demand for bonds, thus driving up the interest rate.d. increase […]

Assume the demand for money curve is fixed and the Fed decreases the money supply. The result Isa temporary a. excess quantity of money demanded.b. excess quantity of money supplied.c. increase in the price of bonds.d. increase in the demand for bonds.

Assume the demand for money curve is fixed and the Fed increases the money supply. The result is that the price of bonds a. rises.b. remains unchanged.c. falls.d. does none of the above.

Using the aggregate supply and demand model, assume the economy is in equilibrium on the intermediate portion of the aggregate supply curve. A decrease in the money supply will decrease the price level and a. lower both the interest rate and the real GDP.b. raise both the interest rate and real GDP.c. lower the interest

Based on the equation of exchange, the money supply in the economy is calculated as

A difficulty in using the Phillips curve as a policy menu is the a. fact that the natural rate of unemployment does not exist.b. fact that the curve would not remain in one position.c. difficulty deciding between monetary and fiscal policies.d. fact that Democrats choose one point on the curve and Republicans choose another point.

Since the 1970s, the a. Phillips curve has not been stable.b. inflation rate and the unemployment rate have been about equal.c. Phillips curve has proven to be a reliable model to guide public policy.d. relationship between the inflation rate and the unemployment rate moved in a counter-clockwise direction.

According to the natural rate hypothesis, a. the Phillips curve is quite flat, so that a large reduction in employment can be achieved without inflation.b. workers only adapt their wage demands to inflation after a considerable time lag.c. the Phillips curve is vertical in the long run at full employment.d. workers cannot anticipate the inflationary

Most of the world’s economies are mixed economies because a. a cartel of powerful transnational firms demands it.b. the market system of allocation is always best.c. the command system of allocation is always best.d. government intervention in an overall market system exists because markets fail when there is market power, a great deal of inequality,

The term “capitalism” refers to which of the following? a. A religion based on amassing capital.b. An economic system characterized by private ownership of resources, and decentralized market allocation.c. An economic system characterized by government ownership of resources and centralized allocation.d. None of the above answers are correct.