The Federal Reserve plays a larger role than Congress and the president in stabilizing the economy because
A) the Federal Reserve can more quickly change monetary policy than the president and the Congress can change fiscal policy.
B) changes in interest rates have their full effect on the economy in a short period of time, whereas changes in government spending and taxes have their full effect over a long period of time.
C) the Federal Reserve can immediately recognize when real GDP is below or above potential GDP.
D) changes in interest rates have a considerably larger effect on the economy than changes in government purchases or taxes.
A
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Normally, whenever the central bank lowers the rate it charges banks for overnight loans market rates of interest:
a. are not affected. b. fall at the same rate. c. increase. d. are unstable.
Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is
A) the same as the opportunity cost of one more bolt of cloth. B) the inverse of the opportunity cost of one more bolt of cloth. C) the ratio of all the bolts of cloth she produces to all the tons of corn she produces. D) the ratio of all the tons of corn she produces to all the bolts of cloth she produces.