Quarterly Data for the Years 1988-93 for the Nominal Federal

question 104

Multiple Choice

Quarterly data for the years 1988-93 for the nominal federal funds interest rate and the output ratio show that the Fed

• A)reacted to a high output ratio by raising the interest rate.
• B)reacted to a high output ratio by lowering the interest rate.
• C)reacted to low output ratios but not to high output ratios.
• D)did not react to movements in the output ratio.

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Definitions:

Market Prices

Prices determined by the supply and demand for goods and services in a competitive market.

Excise Tax

A tax directly levied on certain goods, services, or activities, often with the aim of discouraging their use or consumption.

Relative Burden

The comparative impact of a tax, cost, or other financial obligation on an individual or group.

Inelastic Demand

Inelastic demand is a situation where the demand for a product does not significantly change with a change in the product's price.