Question

day-by-day basis leads to poor long-run outcomes is referred to as the A) adverse selection problem B) moral hazard problem. time-inconsistency problem. D) nominal-anchor problem. 11. (4 points) Even if the Fed could completely control the money supply monetary policy would have critics because A) the Fed is asked to achieve many goals, some of which are incompatible with others. B) the Fed's goals do not include high employment, making labor unions a critic of the Fed. C) the Fed's primary goal is exchange rate stability, causing it to ignore domestic economic conditions. D) it is required to keep Treasury security prices high 12.(4 points) Factors that influenced planned investment spending include A) real interest rates. B) financial frictions. C) emotional waves of optimism and pessimism. D) all of the above. E) A and C. 13. (4 points) Assume that autonomous consumption equals $200 and that the mpc equals 0.8. If disposable income equals $1000, then total consumption equals A) $80. B) $200. C) $800 D) $1000 14. (4 points) The Fed's policy actions of reacting to higher inflation by raising the real interest rate during 2004-2006 were A) upward movements along the monetary policy curve.

Answer 1

Ans 11. (A) The Fed is asked to achieve many goals, some of which are incompatible with others

Ans 12. (D) All of the above

Ans 13. (D) $1,000