When the price level rises
a) firms will spend less on new business buildings and business equipment and households will want to spend less building new homes.
b) the interest rate falls because people will want to hold more money and so sell bonds.
c) the interest falls because people will want to hold less money and so buy more bonds.
d) firms will spend more on new business buildings and business equipment and households will want to spend more on building new homes.
Answer: a) firms will spend less on new business buildings and business equipment and households will want to spend less building new homes.
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When the United States engaged in quantitative easing from 2008 to 2014, why didn't the money supply rise sharply?
A) Foreigners wanted all the new dollars created by the Federal Reserve. B) Banks held the increased monetary base as excess reserves. C) The Fed offset the increased monetary base by raising reserve requirements. D) The Fed offset the increased monetary base by buying foreign currency.
One school of anti-trust thought argues that, rather than ensuring efficiency, anti-trust laws are really aimed at
A) protecting small independent firms against large corporations. B) outlawing all monopolies whether they perform "bad acts" or not. C) price differentiation due to differences in quality and cost. D) restricting interlocking directorates.