2. Which statement(s) is(are) true? I. The Fed is required to promote economic g

Question

2. Which statement(s) is(are) true? I. The Fed is required to promote economic growth accompanied by full employment, stable prices, and moderate long-term interest rates. II. To fight high unemployment, the Fed must stimulate the economy. If the stimulus leads to inflation, the goal of promoting full employment conflicts with the goal of price stability. III. The Fed may have to stimulate the economy to promote economic growth, which can lead to inflation. If the Fed is fighting inflation, it may have to raise interest rates, which conflicts with the goal of moderate long-term interest rates. O II and III only O I and III only O I only O I, II, and III 3. Which of the following would NOT shift the investment demand schedule? O a change in expectations O a change in interest rates O a change in operating costs O a change in technology

Explanation / Answer

Ans:

2) I,II,III

All statements are true.Fed is required to promote economic growth accompained by full employment and stimulating economy will increase inflation. The increase in interest rates will increase savings and decreases the disposable income which  the economy slows and inflation decreases.

3) a change in interest rates

The change in the interest rates will not shift the investment demand schedule.

6) True

if federal reserve buys bonds this will increase the money supply and decreases the nominal interest rates.

7) a decrease in corporate taxes

A decrease in corporate taxes will increase the economic activity and shift the aggregate supply curve to the right.

8) False

A increase in disposable income will increase the imports and the demand for other countrys currencies increases resulting in depreciation of countries currency relative to other curriencies.

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