If inflation is a threat, then the Fed will conduct monetary policy aimed at
A) increasing the interest rate which then will shift aggregate demand to the right.
B) decreasing the interest rate which then will shift aggregate demand to the right.
C) decreasing the interest rate which then will shift aggregate demand to the left.
D) increasing the interest rate which then will shift aggregate demand to theleft.
Ans: D) increasing the interest rate which then will shift aggregate demand to theleft.
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Which of the following are lags that fiscal policy makers must cope with?
A) effect time lags B) recognition time lags C) action time lags D) All of the above are correct.
If a perfectly competitive firm raised the price of its product,
A) its profits would increase. B) the quantity of output it sells decreases to zero. C) rival firms will follow suit and raise their prices also. D) the firm will be forced to advertise more. E) its total revenue would rise but its total cost would rise by more.