The real interest rate is
A. The inflation rate minus the percentage increase in average wages.
B. The sum of inflation rates and unemployment rates.
C. The nominal interest rate minus the anticipated rate of inflation.
D. The difference between the prime rate and the rate charged by the government (the Federal Reserve) on loans.
Answer: C
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When the Fed buys T-bills from banks:
A. the demand for bank reserves rises. B. the supply of T-bills rises. C. the supply of bank reserves rises. D. the supply of bank reserves falls.
A decrease in demand and an increase in supply will lead to
A) an unambiguous decrease in quantity, but the effect on price is indeterminate. B) an unambiguous decrease in price, but the effect on quantity is indeterminate. C) unambiguous decreases in both price and quantity. D) unambiguous increases in both price and quantity.