In the short run, a central bank can most easily stimulate economic activity by
A: selling government bonds to the public
B: raising interest rates to make investments more profitable
C: lowering the inflation rate though monetary restriction
D: influencing aggregate supply through monetary expansion
E: influencing aggregate demand and accepting a higher price level in the future
A: selling government bonds to the public
B: raising interest rates to make investments more profitable
C: lowering the inflation rate though monetary restriction
D: influencing aggregate supply through monetary expansion
E: influencing aggregate demand and accepting a higher price level in the future
举一反三
- By lowering short-term interest rates, a central bank can stimulate economic activity A: since it encourages more investment spending B: since more durable consumption goods will be bought C: but only in the short run D: but it may lead to a higher price level E: all of the above
- If a central bank wants to avoid high inflation in an economic boom it can A: try to lower investment spending though open market purchases B: raise interest rates in an effort to affect aggregate supply C: lower bank reserves by buying government bonds D: decrease the level of potential GDP by permanently restricting money supply growth E: none of the above
- Which of the following is NOT a way in which a central bank can conduct its monetary policy? A: by establishing target interest rates and then undertaking open market operations to maintain them B: by buying and selling government bonds C: by making small policy changes and readjusting policies as needed D: by changing the rate of capital accumulation to influence aggregate supply E: by changing interest rates to influence spending on durable goods and investment
- Which of the following is most commonly used to monitor short-run changes in economic activity? A: the inflation rate B: real GDP C: aggregate demand D: aggregate supply
- Which of the following is FALSE? A: in the long run, a central bank can effectively limit inflation B: in the long run, a central bank can do fairly little to stimulate real GDP C: in the long run, monetary policy has no effect on nominal GDP D: unless inflation is very high, stimulating the economy does more to enhance economic welfare than controlling inflation E: a central bank can lower the inflation rate but only by allowing for a loss in real GDP, at least in the short run