If the Fed were to announce that fighting inflation is not a high priority for the immediate future ________
A) households might expect higher inflation
B) the short run aggregate supply would shift upwards
C) firms might begin raising their prices to keep up with expected inflation
D) all of the above
E) none of the above
D
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For this question, assume that policy makers are pursuing a fixed exchange rate regime. Now suppose that a reduction in stock market wealth causes a decrease in consumption. Which of the following will tend to occur in a fixed exchange rate regime?
A) a reduction in Y B) a reduction in the money supply C) no change in the domestic interest rate D) all of the above
Considering the price-elasticity of demand for wheat, we would expect that if the supply of wheat increases, other factors constant, then wheat farmers' total revenues would:
A. Increase because the demand is price-inelastic B. Decrease because the demand is price-inelastic C. Increase because the demand is price-elastic D. Decrease because the demand is price-elastic