Which of the following examples shows a coordination problem with monetary policy?
a. Five months after the Fed decreases the money supply, consumer confidence in investing plummets.
b. When the Fed decreases the money supply, the government increases purchases.
c. After the Fed increases the money supply, pension funds decrease their interest rates.
d. After the Fed increases the money supply, the government realizes the MPC estimate was too high.
b. When the Fed decreases the money supply, the government increases purchases.
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According to the political business cycle, after an election, unless the central bank acts inflation is likely to
a. have risen. To counter this the central bank would raise interest rates. b. have risen. To counter this the central bank would lower interest rates. c. have fallen. To counter this the central bank would raise interest rates. d. have fallen. To counter this the central bank would lower interest rates.
The price elasticity of supply for the Hope Diamond is zero because there is only one. Therefore, the supply curve for the Hope Diamond is
A. perfectly inelastic. B. unit elastic. C. elastic. D. perfectly elastic.