Maximum employment and moderate long-term interest rates are best achieved with price stability. high and variable inflation rates. high real interest rates. high and stable inflation rates. high short-term interest rates. If the Fed sells U.S. government securities to banks, the federal funds rate ________ and banks' reserves ________. falls; increase falls; decrease rises; do not change rises; decrease rises; increase The Fed ________ influence the real interest rate in the short run and ________ influence the real interest rate in the long run. cannot; can cannot; cannot can; can can; cannot might be able to; might be able to In the long run, the real interest rate is determined by the nominal interest rate. the expected inflation rate. saving supply and investment demand. Fed actions. the multiplier effect. If the Fed raises the federal funds rate, in the short run the interest rate falls. exports increase and imports decrease.
Maximum employment and moderate long-term interest rates are best achieved with price stability. high and variable inflation rates. high real interest rates. high and stable inflation rates. high short-term interest rates. If the Fed sells U.S. government securities to banks, the federal funds rate ________ and banks' reserves ________. falls; increase falls; decrease rises; do not change rises; decrease rises; increase The Fed ________ influence the real interest rate in the short run and ________ influence the real interest rate in the long run. cannot; can cannot; cannot can; can can; cannot might be able to; might be able to In the long run, the real interest rate is determined by the nominal interest rate. the expected inflation rate. saving supply and investment demand. Fed actions. the multiplier effect. If the Fed raises the federal funds rate, in the short run the interest rate falls. exports increase and imports decrease.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Maximum employment and moderate long-term interest rates are best achieved with
price stability.
high and variable inflation rates.
high real interest rates.
high and stable inflation rates.
high short-term interest rates.
If the Fed sells U.S. government securities to banks, the federal funds rate ________ and banks' reserves ________.
falls; increase
falls; decrease
rises; do not change
rises; decrease
rises; increase
The Fed ________ influence the real interest rate in the short run and ________ influence the real interest rate in the long run.
cannot; can
cannot; cannot
can; can
can; cannot
might be able to; might be able to
In the long run, the real interest rate is determined by
the nominal interest rate.
the expected inflation rate.
saving supply and investment demand.
Fed actions.
the multiplier effect.
If the Fed raises the federal funds rate,
in the short run the interest rate falls.
exports increase and imports decrease.
real GDP increases.
investment increases.
exports decrease and imports increase.
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