According to the quantity theory of money, if the economy were facing inflation, the Federal Reserve Bank could combat it by:
A. decreasing the supply of money.
B. increasing the supply of money.
C. cutting taxes.
D. increasing taxes.
A. decreasing the supply of money.
Economics
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In order to ________ the long-run real interest rate, the Fed needs to ________
A) raise; raise the long-run inflation expectations B) raise; lower the long-run nominal interest rate C) lower; raise the long-run nominal interest rate D) lower; raise the long-run inflation expectations
Economics
Zero profit in the economic sense means that firms are earning a normal rate of return.
Answer the following statement true (T) or false (F)
Economics