If the Fed fears inflation, then the Fed
A) directs banks to raise the nominal interest rate.
B) will increase the income tax rate on interest income.
C) directs banks to lower the nominal interest rate.
D) will sell government securities in the open market.
E) will buy government securities in the open market.
D
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To be useful, a model must
A) predict accurately all of the time. B) predict more accurately than other models that have been developed. C) have assumptions that have been verified by empirical testing. D) explain and predict the behavior of every individual.
Which of the following statements is not related to the price controls that existed during World War II?
a. Price ceilings facilitated the formulation of black markets for automobiles. b. A black market for meat formed, referred to as "meat-easies," due to a price ceiling on meat. c. Price ceilings created an excess demand of consumer durable goods. d. Despite price ceilings, hidden price increases were realized through deterioration in the quality of goods.