Question : 81) If the Fed raises the federal funds rate, eventually : 1240654

 

 

 

 

81) If the Fed raises the federal funds rate, eventually the

A) AD curve shifts rightward and real GDP increases.

B) AD curve shifts leftward and real GDP decreases.

C) AS curve shifts rightward and real GDP increases.

D) AS curve shifts leftward and real GDP decreases.

E) AD curve shifts rightward and real GDP decreases.

82) If the Fed raises the federal funds rate, eventually the

A) AD curve shifts leftward, decreasing real GDP and increasing the price level.

B) AS curve shifts leftward, decreasing real GDP and increasing the price level.

C) AD curve shifts rightward, increasing real GDP and the price level.

D) AD curve shifts leftward, decreasing real GDP and the price level.

E) AS curve shifts rightward, decreasing real GDP and increasing the price level.

 

83) When there is a threat of inflation in the economy, the Fed can ________ the federal funds rate to ________ aggregate demand and ________ the price level.

A) lower; increase; decrease

B) raise; decrease; increase

C) lower; increase; increase

D) raise; decrease; decrease

E) raise; increase; decrease

 

84) Raising the federal funds rate shifts the aggregate demand curve ________ so that real GDP ________ and the price level ________.

A) rightward; increases; rises

B) leftward; decreases; rises

C) rightward; increases; falls

D) leftward; decreases; falls

E) leftward; increases; rises

85) Which of the following is a problem in pursuing monetary policy?

A) The lag between a change in the quantity of money and its effect on economic activity may be long.

B) Monetary policy must be approved by the Congress.

C) The Fed must reveal to the public anytime the Fed changes its policy.

D) The Fed cannot control the federal funds rate.

E) None of the above answers is correct.

 

86) One problem with the ripple effect from the Fed’s monetary policy is

A) the fact that the monetary policy transmission process is long and drawn out.

B) that changing the Federal funds target rate seldom has an effect on the markets for reserves and loanable funds.

C) that the Fed’s policy sometimes has a large impact on potential GDP as well as its usual impact on aggregate demand.

D) the tight relationship between that the Federal funds rate has to aggregate spending.

E) the frequent misalignment of the spread between the Federal funds rate and the Federal funds rate target.

 

87) When the Fed lowers the federal funds rate, which of the following economic variables responds most rapidly?

A) consumption expenditure

B) the supply of loanable funds

C) the long-term real interest rate

D) other short-term interest rates

E) the inflation rate

88) When the Fed lowers the federal funds rate, which of the following economic variables responds most slowly?

A) consumption expenditure

B) the supply of loanable funds

C) the long-term real interest rate

D) other short-term interest rates

E) the inflation rate

 

89) When the Fed lowers the federal funds rate, the quantity of money ________ and the supply of loanable funds ________.

A) increases; increases

B) increases; decreases

C) decreases; decreases

D) decreases; increases

E) increases; does not change

 

90) When the Fed raises the federal funds rate, the consumption expenditure ________ and investment ________.

A) does not change; does not change

B) does not change; decreases

C) increases; decreases

D) increases; increases

E) decreases; decreases

91) When the Fed raises the federal funds rate, the exchange rate ________ and net exports ________.

A) does not change; does not change

B) does not change; decreases

C) increases; decreases

D) increases; increases

E) decreases; decreases

 

92) A change in the federal funds rate ________ the supply of loanable funds, ________ the long-term real interest rate, and ________ investment.

A) affects; affects; affects

B) affects; affects; does not affect

C) does not affect; affects; does not affect

D) affects; does not affect; affects

E) does not affect; does not affect; does not affect

 

93) If the Fed wants to fight recession, it will ________ the federal funds rate in order to ________.

A) raise; increase aggregate demand

B) raise; decrease aggregate supply

C) raise; increase aggregate supply

D) lower; increase aggregate supply

E) lower; increase aggregate demand

94) If the Fed wants to fight inflation, it will ________ the federal funds rate in order to ________.

A) raise; decrease aggregate demand

B) raise; decrease aggregate supply

C) raise; increase aggregate supply

D) lower; increase aggregate supply

E) lower; decrease aggregate demand