In the hard-landing scenario the ability of the Fed to respond
a. is unlimited
b. is constrained because their inclination to raise interest rates would further compound the value of the dollar problem.
c. is constrained because their inclination to lower interest rates would further compound the value of the dollar problem.
d. limited because the resulting boom would run out of control.
e. is constrained because their inclination to lower taxes would depress tax revenues.
C
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In the quantity equation, the total output of the economy Y is used instead of transactions T because:
A. income is harder to measure than transactions. B. transactions are harder to measure than income. C. transactions grow at a faster rate than income. D. transactions grow at a slower rate than income.
If economists forecast an increase in aggregate expenditure, which of the following is likely to occur?
A) GDP will fall. B) Wages will fall. C) Inventories will rise. D) GDP will rise.