Answer the following questions true (T) or false (F)
1. In reality, the Fed is unable to use monetary policy to keep real GDP exactly at its potential level.
2. The Fed can use contractionary monetary policy in an attempt to keep inflation from increasing.
3. The Fed can use expansionary monetary policy to lower interest rates to stimulate aggregate demand.
1. TRUE
2. TRUE
3. TRUE
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The above figure shows the apartment market in Big City. A rent ceiling of $1400 per month would
A) create a black market. B) increase search activity. C) not affect the market. D) create a surplus of apartments.
If technology improves when a nation is in the intermediate range and only the Aggregate Supply changes, then:
a. Real GDP rises and average price level falls. b. Real GDP rises and real GDP remains the same. c. Real GDP remains the same and average price level falls. d. Real GDP remains the same and average price level rises. e. Real GDP remains the same and average price level remains the same.