Answer the following statement(s) true (T) or false (F)
1. The Federal Reserve’s policies with respect to the money supply have a direct effect on short-run nominal interest rates.
2. Even when the Fed changes the money supply by changing one of its policy variables, it has little effect on the money market equilibrium.
3. When interest rates on short-term financial assets such as CDs or U.S. Treasury bills are low, the opportunity cost of holding money is high.
4. A decrease in the demand for money will shift the money demand curve to the left.
5. The higher the price level, the lower the demand for money.
1.true
2.false
3.false
4.true
5.false
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Failure to coordinate monetary policies with ________ exchange rates can lead to ________ that might be offset by coordination
A) floating; negative externalities B) floating; sterilization C) fixed; negative externalities D) fixed; sterilization
Which of the following statements is FALSE?
A) Cartels only form among members of an oligopoly. B) A cartel might form if members believe they can increase profits by coordinating activity. C) Members of a cartel produce less output than that produced in a competitive market. D) Cartel members often have an incentive to cheat.