Which of the following will increase interest rates in the short run?
a. an decrease in reserve requirements
b. the sale of bonds by the Federal Reserve in the open market
c. a decrease in real GDP
d. an decrease in the price level
B
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If a firm that has total revenue of $5 million shuts down, we may conclude that its variable costs are __________.
Fill in the blank(s) with the appropriate word(s).
Refer to the graph shown. Suppose an economy begins at point B but then adopts a contractionary monetary policy. In the short run, this policy would most likely:
A. reduce inflation to 3 percent and reduce unemployment to 4 percent. B. raise inflation to 9 percent and reduce unemployment to 4 percent. C. reduce inflation to 3 percent and raise unemployment to 7.5 percent. D. raise inflation to 9 percent and raise unemployment to 7.5 percent.