The four main policy tools the Federal Reserve System uses to influence the interest rate are setting
A) credit easing, the discount rate, setting tax rates, and setting the required reserve ratio.
B) the discount rate, open market operations, extraordinary crisis measures and setting the required reserve ratio.
C) quantitative easing, open market operations, setting tax rates, and setting the required reserve ratio.
D) quantitative easing, market interest rate and the discount rate, as well as open market operations.
E) the prime rate, open market operations, extraordinary crisis management and setting the excess reserve ratio.
B
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Which of the following will hold true if the market for cameras is in equilibrium at a price of $40?
A) The quantity of cameras produced will equal the quantity of cameras bought in the market. B) Sellers of cameras will have an incentive to charge a price higher than $40. C) Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium. D) If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras.
While much of New Classical macroeconomics is being refuted by the evidence, at least one part of it may be a permanent legacy to all macroeconomists: the assumption of
A) continuous clearing of all markets. B) rational expectations. C) the unimportance of nominal variables. D) supply shocks as the main cause of business cycles.