If the Federal Reserve lowered the reserve requirements imposed on the banking industry, which of the following will most likely happen in the short run?
a. an increase in the demand for loanable funds, which will exert upward pressure on the interest rate
b. an increase in the supply of loanable funds, which will exert downward pressure on the interest rate
c. an increase in the unemployment rate
d. a decrease in the rate of inflation
B
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What is the present value of $100 two years from now at an interest rate of 6%?
A) $6 B) $89 C) $94.34 D) $106
For a constant-returns-to-scale production function,
a. marginal costs are constant but the average cost curve has a U-shape. b. both average and marginal costs are constant. c. marginal cost has a U-shape; average costs are constant. d. both average and marginal cost curves are U-shaped.
"Dividing the economic pie more equally may reduce the size of the economic pie." This argument is characterized as:
A. a trade off between interest rates and unemployment. B. a form of discrimination. C. a conflict between equity and efficiency. D. a conflict between full employment and economic growth.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.