The aggregate demand curve shifts to the right when the Fed:
A. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function.
B. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
C. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function.
D. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
Answer: A
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Which of the following statements is true of a country that has a gold standard exchange rate system?
A. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase the price of gold. B. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to decrease the price of gold. C. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to reduce its money supply. D. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase its money supply.
Billy is considering the purchase of a rental house. The house costs $240,000 and it will generate annual revenues of $15,000 and annual expenses of $3,000
Nevertheless, Billy will need to borrow $240,000 at an interest rate of 7% per year in case he decides to make this investment. Should Billy purchase this house? A) No, he will lose money. B) Yes, his profits will be zero. C) No, his profits will be positive but close to zero. D) Yes, he will profit from this investment.