The main policy instrument used by the Federal Reserve is the target federal funds rate.
a. True b. False
a
The foundation of the IS curve is the national income identity given by the equation Yt = Ct +
It + Gt + IMt - EXt.
a. True b. False
b
When the real interest rate rises, there is leftward movement along the IS curve.
a. True b. False
a
,The link between real and nominal interest rates is summarized in the Fisher equation.
a. True b. False
a
On the aggregate demand curve, if the rate of inflation rises, short-term output will rise
as the curve shifts right.
a. True b. False
b
,When economists say "sticky inflation," they mean that inflation does not react directly with
the monetary policy.
a. True b. False
a
In the long run, ā=0 and Rt= r̄ .
a. True b. False
a
In Figure 9.6, area b represents an economic boom and area a is a recession.
a. True b. False
b
, When the Federal Reserve increases the interest rate, the MP curve shifts up and short-term
output falls.
a. True b. False
a
An increase in military spending will cause the AD curve to shift to the right.
a. True b. False
a
A sudden increase in the price of oil will cause the AS curve to shift up and to the left.
a. True b. False
a
a. True b. False
a
The foundation of the IS curve is the national income identity given by the equation Yt = Ct +
It + Gt + IMt - EXt.
a. True b. False
b
When the real interest rate rises, there is leftward movement along the IS curve.
a. True b. False
a
,The link between real and nominal interest rates is summarized in the Fisher equation.
a. True b. False
a
On the aggregate demand curve, if the rate of inflation rises, short-term output will rise
as the curve shifts right.
a. True b. False
b
,When economists say "sticky inflation," they mean that inflation does not react directly with
the monetary policy.
a. True b. False
a
In the long run, ā=0 and Rt= r̄ .
a. True b. False
a
In Figure 9.6, area b represents an economic boom and area a is a recession.
a. True b. False
b
, When the Federal Reserve increases the interest rate, the MP curve shifts up and short-term
output falls.
a. True b. False
a
An increase in military spending will cause the AD curve to shift to the right.
a. True b. False
a
A sudden increase in the price of oil will cause the AS curve to shift up and to the left.
a. True b. False
a
