If the Fed reduces the discount rate, which of the following are most likely to result?
a. The money supply curve shifts rightward, and the equilibrium interest rate falls in the money market.
b. Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
c. Investment rises, causing the aggregate demand curve to shift rightward, increasing equilibrium real GDP and thus accelerating the economy.
d. Both a. and b. above are correct.
e. Both a. and c. above are correct.
e
Economics
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If the money interest rate is 7 percent and the inflationary premium 4 percent, the real interest rate is
a. -3 percent. b. 3 percent. c. 4 percent. d. 7 percent.
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The curve representing the set of efficient portfolios must be
a. concave. b. linear. c. convex. d. a ray from the origin.
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