What effect does restrictive monetary policy have on short-term real interest rates?
a. Restrictive monetary policy tends to push short-term interest rates upward.
b. Restrictive monetary policy tends to push short-term interest rates downward.
c. The effect of restrictive monetary policy on short-term interest rates is unpredictable.
d. Restrictive monetary policy has no effect on short-term interest rates.
A
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In the figure above, if a tax is imposed that generates an efficient allocation of resources, then consumers will pay a price of
A) $250 per unit. B) $200 per unit. C) $150 per unit. D) $100 per unit.
The other-things-constant assumption
a. allows the economist to make useful predictions b. is a prediction c. applies only to consumers' decisions, not to those of firms d. forces the economist to ignore reality, where things are constantly changing e. implies rational self-interest on the part of all economic actors