Assume that the Federal Reserve replaces the money stock with the interest rate as an intermediate target. Then,
a. the range for the target interest rate would be chosen to hit the inflation rate, unemployment rate, and growth rate of the economy.
b. if the Treasury bill rate fell temporarily below the target range, the Open Market Desk would sell securities in the open market until the Treasury bill rate rose to the target range.
c. if the Treasury bill rate rose above the target range, the Open Market Desk would purchase Treasury bills or other government securities.
d. All of the above
D
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Refer to Figure 24-2. Ceteris paribus, an increase in the labor force would be represented by a movement from
A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A.
Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college. How would an economist look at the matter?
a. There is no opportunity cost, assuming that future earnings actually increase as expected. b. The opportunity cost is much less than it would appear, assuming that earnings increase. c. Opportunity cost is a meaningless concept in this situation. d. The college students are completely correct in all respects. e. There is still an opportunity cost, even if it is justified by higher future earnings.