Question Details

The least reasonable way to complete this clipping is 



1. "The desire to see interest rates lower, or to avoid increases, is natural. But attempts to accomplish that desirable end by excessive monetary growth would soon be counterproductive. The implications for interest rates would in the end be perverse." Interest rate movements would in the end be perverse because 
a) lower bond prices could not be sustained by this policy 
b) unemployment would force the Fed to change its policy 
c) budget deficits would force the Fed to change its policy 
d) inflation expectations would raise the nominal interest rate 
2. A large annual increase in the federal debt can lead to inflationary pressure if 
a) the total debt exceeds 50% of GDP 
b) business is so concerned about the size of the debt that investment spending is cut back 
c) the government attempts to liquidate the debt rapidly by increasing tax rates and cutting back government spending 
d) the debt leads the central bank to maintain low interest rates when a more restrictive monetary policy is appropriate 97 
3. By targeting on the nominal interest rate, the central bank 
a) is following the monetarist rule b) controls the real rate of interest 
c) loses control over the money supply 
d) reduces uncertainty in the business community 
4. "Business productivity in the last quarter grew at its fastest pace in six years, offering another explanation for how the strong U.S. economy has kept inflation at bay." Higher productivity growth helps keep inflation at bay by all of the following except 
a) increasing aggregate supply b) decreasing the demand for money 
c) lowering the natural rate of unemployment 
d) allowing wage increases without price increases 
5. "The robust increase of production has been using up our nation's spare labor resources, suggesting that recent strong growth in spending cannot continue without a pickup in inflation unless ............" The least reasonable way to complete this clipping is 
a) investment increases b) productivity growth increases 
c) the natural rate of unemployment falls 
d) there is a large increase in encouraged workers



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