During the Great Depression, one reason the Federal Reserve did not respond forcefully was the "free gold problem," which refers to the idea that ___
a. gold was fleeing Nazi Germany, thus undermining the Fed's attempt to control the money supply
b. gold was essentially free because people had excess supplies of currency that could be converted into gold
c. the Fed claimed that almost all its gold was tied up by reserve requirements (there was little free so it could not increase the money supply)
d. gold was essentially free because silver, which existed in abundance, could be converted into gold at the fixed rate of 16:1
c. the Fed claimed that almost all its gold was tied up by reserve requirements (there was little free so it could not increase the money supply)
You might also like to view...
In the long run, unemployment will be at the natural rate. This implies that
A. there is a one-to-one relationship between unemployment and inflation and consequently, the Phillips curve is vertical. B. there is no relationship between unemployment and inflation and consequently, the Phillips curve is vertical. C. there is a positive relationship between unemployment and inflation and consequently, the Phillips curve is upward-sloping. D. there is a negative relationship between unemployment and inflation and consequently, the Phillips curve is downward-sloping.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline