If the Fed raises its target for the federal fund rate, this indicates that
A) the Fed is pursuing an expansionary monetary policy.
B) the Fed is pursuing a contractionary monetary policy.
C) the Fed is attempting to combat deflation.
D) The Fed is concerned that the growth in aggregate demand is too slow to keep up with potential GDP.
Answer: B
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Qualifying for admission to the Eurozone requires a nation to:
A) petition for membership with the European parliament. B) demonstrate a commitment to democratic principles and take an antiterrorist stance. C) peg its exchange rates to the euro and demonstrate fiscal responsibility for a length of time. D) join the IMF and the UN, and be recommended by other members.
Suppose a firm has an investment project which will cost $200,000 and result in $30,000 profit. The firm will not undertake the project if the interest rate is
A) greater than 15 percent. B) greater than 10 percent. C) greater than 5 percent. D) positive.