According to the quantity theory of money, the Fed could combat inflation by: Multiple Choice decreasing the supply of money. increasing taxes. increasing the supply of money. reducing taxes.
9. According to the quantity theory of money, the Fed could combat inflation by:
Multiple Choice
-
decreasing the supply of money.
-
increasing taxes.
-
increasing the supply of money.
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reducing taxes.
10. The real interest rate is:
Multiple Choice
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adjusted for inflation.
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the amount of interest the bank pays you for saving or charges you for borrowing.
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the federal funds rate.
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the actual average interest rate in the economy.
11. Suppose the annual nominal interest rate is 10 percent and the inflation rate is 6 percent. If you deposit $1,000, at the end of the year:
Multiple Choice
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your
purchasing power will have increased. -
your savings will have nominal increased by $100.
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you will have earned a real
rate of return of 4 percent. -
All of these statements are true.
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