An unanticipated shift to a more restrictive monetary policy by the Fed will
a. increase real interest rates and, thereby, reduce investment, current consumption, and aggregate demand.
b. reduce real interest rates, leading to a depreciation of the dollar and an expansion in net exports and aggregate demand.
c. increase real interest rates, leading to higher asset prices that will stimulate aggregate demand.
d. reduce real interest rates and, thereby, stimulate investment, current consumption, and aggregate demand.
A
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Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of
A) a Pigovian tax. B) the Coase Theorem. C) a transactions cost. D) a Pigovian subsidy.
Which of the following can be analyzed using microeconomic models?
A) economic growth B) a country's international trade pattern C) a firm's output level decision D) determinants of money supply