Automatic stabilizers quizlet1/10/2024 In this case, policymakers would seek to move the economyĪ. A Suppose an economy is operating with an inflationary gap. a change in transfer costs C The notion that there is a tradeoff between inflation and unemployment is expressed as aĭ. ![]() increase and, as a result, net exports in the United States will increase B Which of the following does not cause the money demand curve to shift?ĭ. decrease and, as a result, net exports in the United States will decreaseĭ. decrease and, as a result, net exports in the United States will increaseĬ. increase and, as a result, net exports in the United States will decreaseī. dollars goes down, the exchange rate willĪ. foreign products are now more expensive to U.S. products are now cheaper to foreign countries.ī. an increase in the price of bonds, a decrease in the interest rate, and an increase in aggregate demand. an increase in the price of bonds, an increase in the interest rate, and an increase in aggregate demand.ĭ. a decrease in the price of bonds, an increase in the interest rate, and an increase in aggregate demand.Ĭ. a decrease in the price of bonds, a decrease in the interest rate, and a decrease in aggregate demand.ī. determined by the time to maturity B An increase in the demand for bonds leads toĪ. If the money supply grows at a faster rate than real GDP, there will be inflation. If the money supply grows at the same rate as real GDP, the price level will be fall and there will be deflation.ĭ. If the money supply grows at a slower rate than real GDP, there will be inflation.Ĭ. If the money supply grows at the same rate as real GDP, the price level will also increase at the same rate as real GDP.ī. M Y = P V B Which of the following predictions can be made using the growth rates associated with the quantity equation, assuming velocity is stable?Ī. D Let M = money supply P = price level V = velocity Y = real GDP. A A liquidity trap is said to exist when a change in monetary policy has no effect onĭ. the implementation lag D When the Fed lowers the target rate of interest for federal funds, itĭ. C The time it takes for the Fed or government policymakers to enact policies to correct unemployment or inflation problems is a source of which lag?ĭ. Congress C The lag in realizing that a macroeconomic problem exists is calledĭ. the Federal Open Market Committee and the U.S. ![]() the Board of Governors and the Federal Open Market Committeeĭ. the Board of Governors and the Presidents' officeĬ. higher interest rate, lower exchange rate, decreased demand for investment and increased demand for net exports C What are the two policy making bodies of the Federal Reserve?Ī. higher interest rate, higher exchange rate, decreased demand for investment and decreased demand for net exportsĭ. lower interest rate, lower exchange rate, increased demand for investment and net exportsĬ. lower interest rate, higher exchange rate, decreased demand for investment and net exportsī. ![]() B Which of the following result from a change in the money supply brought about by an open market sale?Ī. bond prices to rise and interest rates to fall. bond prices and interest rates to rise.ĭ. bond prices to fall and interest rates to rise.Ĭ. bond prices and interest rates to fall.ī. When the Fed sells bonds in the open market, we can expectĪ.
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