Even if the Fed could completely control the money supply, monetary policy would have critics becauseA) the Fed is asked to achieve many goals, some of which are incompatible with others.B) the Fed's goals do not include high employment, making labor unions a critic of the Fed.C) the Fed's primary goal is exchange rate stability, causing it to ignore domestic economic conditions.D) it is required to keep Treasury security prices high.The ________ problem of discretionary policy arises because economic behavior is influenced by what firms and people expect the monetary authorities to do in the future.A) moral hazardB) time-inconsistencyC) nominal-anchorD) rational-expectationInflation results inA) ease of planning for the future.B) ease of comparing prices over time.C) lower nominal interest rates.D) difficulty interpreting relative price movements.A nominal variable, such as the inflation rate or the money supply, which ties down the price level to achieve price stability is called ________ anchor.A) a nominalB) a realC) an operatingD) an intermediateWhat country has most gas consumption and production?which of th following would decrease if South Korea imposes an import quota on automobiles. a. South Korean exports and S Korean imports b. S.K. exports, but not importsc. S.K. imports, but not exportsd. neitherTom receives a check for 10000 from his uncle. If he puts 8000 in a savings account and spends the rest what is the marginal propensity to consume? a.1 b. 0.80c.0.40d. 0.20all else constant, a change in ___ is expected to have a lager impact than change in ___ on total demand for goodsand services a. government spending, taxes b. taxes, government spending c. changes are the sameDuring the last recession many governments attempted to balance their budgets. In practice, this typically involves a decrease in spending and an increase in taxes. In the IS-LM framework, what is the expected outcome of decreasing government spending and increasing taxes? a. Lower interest rates and higher outputb.Lower interest rates and lower output c. Higher interest rates and higher outputd. Higher interest rates and lower output *In the open economy macroeconomic model, if a country interest rate rises, then its a. net capital outflow and net export rise b. net capital outflow rises and its net exports fall c. net capital outflow falls and its net exports rised. net capital outflow and net exports fallIn the IS-LM model an increase in the money supply leads to a __ interest rate and ___ output. a. lower, lowerb. lower, higher c. higher, higherd. higher, lowermost economists believe that the classical theory of the economy best describes a. short runb. long runc. both long and short rund. neitherDue to a period of inflation there is a decline in the supply of real money balances. According to the IS-LM framework, this is expectede to ___ the interest rate and ___ output. a. decrease, decreaseb.decrease, increasec.increase,increased.increase, decreaseIf a country removed an import quota on cotton, then overall that country a. exports and imports would riseb. exports rise, import would fallc. exports would fall and imports would rised. exports + imports fallA country has a national saving of 80 billion, government expenditures of 40 billion, domestic investment of 50 billion, and net capital outflow of 30 billiom. what is supply of loanable funds? a. 30 b. 40c.50d. 80Suppose if country Y firms typically lay of workers one month after recession begin. After the end of a recession, national employment does not increase for two month. Employment would be considered a ___ variablea. leading b. lagging c. acyclical d. countercyclicalEconomists have found that enrollment in university increases during recession and falls during expansions. in this case, student enrollment in university would be a. procyclical b. countercyclical c. acyclical d. leadingWhich of the following is a leakage from the multiplier processa. savings b. taxesc. importsd. A and Be. A B CSuppose taxes are lowered in an economy. at the same time the nation central bank buys bonds through open market operations. In the IS-LM framework, these changes are expected to ___ the economy interest rate and ___ its GDP a. Increase, increase b. decrease, increase c. increase, have uncertain impact ond. have uncertain impact on, increaseSuppose that a 20 increase in government spending raises total demand for goods an services by 30. Assuming there is no crowding out, what is the marginal propensity to consume? a. 1.5 b. 0.67c. 0.33d. none
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