When the Federal Reserve increases the Federal Funds target rate, it achieves this target by
a. purchasing government bonds. This action will reduce investment and shift aggregate demand to the right.
b. purchasing government bonds. This action will increase investment and shift aggregate demand to the right.
c. selling government bonds. This action will reduce investment and shift aggregate demand to the left.
d. selling government bonds. This action will increase investment and shift aggregate demand to the left.
c
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Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent
If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent. A) 8; 6 B) 8; 2 C) 0; 1 D) 8; 4 E) 6; 2
In the table above, what price level belongs in space D?
A) 125 B) 130 C) 140 D) 145