Figure 16-3
Figure 16-3 shows the impact of deficit spending and the corresponding economic expansion on the demand curve for money. If the Federal Reserve does not want interest rates to rise, it will
a.
shift the money supply curve to the right by monetizing the deficit.
b.
shift the money supply curve to the left by open market sales of government securities.
c.
maintain the current targets for both M1 and M2 money stocks.
d.
engage in contractionary monetary policy, such as increases in the discount rate.
a
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The presence of union wages leads to
A) a fall in the real wage rate as more people are hired. B) less job search as more workers are hired. C) job rationing because the real wage exceeds the equilibrium real wage. D) a fall in the real wage rate as fewer people are hired. E) lower unemployment because workers do not want to lose the high union wage they are being paid.
Define utility. What are individual units of utility called?
What will be an ideal response?