If the Fed wishes to maintain its interest rate target in the face of increased money demand it would likely
a. increase the money supply.
b. decrease the money supply.
c. more stringently enforce already existing banking regulations.
d. propose new banking regulations.
e. become more lax when it enforces already existing banking regulations.
A
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If you have a mortgage on your house at 6 percent and the inflation rate when the mortgage was acquired was 3 percent but has since increased and is now 8 percent per year; the current real interest rate is
A) -2 percent per year. B) 8 percent per year. C) 6 percent per year. D) 0 percent per year. E) 14 percent per year.
Some economists argue that the federal government should normally run a deficit at potential GDP, with the borrowed funds applied to
A) health care costs. B) social security benefits. C) investment goods. D) consumption goods.