Imagine that you are a member of the Board of Governors of the Federal Reserve. If the economy is experiencing rapid inflation, what actions might you advocate? Why?
Actions that would help curb inflation would include selling bonds on the open market and, perhaps,
raising the discount rate or the legal reserve requirement. These actions take excess reserves out of banks'
hands and prevent them from making loans. This takes pressure off spending and helps prevent further
price level increases.
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The total amount of spending on nonresidential structures, equipment, software, residential structures, and business inventories in a given period of time is called:
A) net exports. B) government consumption and investment. C) gross private domestic investment. D) personal consumption.
Which of the following is the prime objective of an industrial policy for any country?
a. To secure a leading global role for selected domestic industries b. To promote and encourage the import of goods and services c. To secure the interests of migrant workers d. To encourage specialization of labor e. To ensure a high level of competition for domestic firms