Suppose the government issues bonds to finance an increase in government spending. In the bond market,
A) the demand curve shifts right, leading to an increase in bond prices, and a decrease in interest rates.
B) the supply curve shifts right, leading to a decrease in bond prices, and an increase in interest rates.
C) the demand curve shifts left, leading to a decrease in bond prices, and an increase in interest rates.
D) the supply curve shifts left, leading to an increase in bond prices, and an increase in interest rates
Ans: B) the supply curve shifts right, leading to a decrease in bond prices, and an increase in interest rates.
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Refer to the diagram. Assume that nominal wages initially are set on the basis of the price level P 2 and that the economy initially is operating at its full-employment level of output Q f . In the short run, cost-push inflation could best be shown as:
A. a leftward shift of aggregate supply from AS 2 to AS 3 .
B. a move from b to c on AS 2 .
C. a move from b to c to d.
D. a move from b to f to d.
If Fredonia has a closed economy, it ________ with other countries.
A. does not negotiate B. trades C. does not trade D. prevents it's citizens from traveling to other countries but trades