Answer the following questions true (T) or false (F)
1. If the Fed wishes to decrease the supply of money and credit, it may sell government securities, raise the discount rate, or lower required reserve ratios.
2. The Fed was founded in 1913 to serve as lender of last resort to bankers during bank runs and panics.
3. If the rate of growth in real GDP exceeds the rate of growth in the money supply, the quantity theory of money predicts a price deflation.
1. FALSE
2. TRUE
3. TRUE
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American households spend more of their incomes on goods than on services.
Answer the following statement true (T) or false (F)
The AS curve shifts leftward if
A) good weather increases agricultural harvests. B) OPEC reduces world oil prices. C) tax cuts stimulate labor supply. D) the money wage rate increases. E) government expenditure increases.
IMF refers to the International Market Fund
Indicate whether the statement is true or false
The purchasing power parity theory claims that a change in relative ________ between two countries must cause a change in ________ in order to keep the prices of goods in two countries fairly similar.
A) exchange rates; inflation B) inflation; exchange rates C) interest rates; inflation D) interest rates; exchange rates