Total Reserves minus vault cash equals
A) bank deposits with the Fed.
B) excess reserves.
C) required reserves.
D) currency in circulation.
A
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In the aggregate expenditure model, which of the following variables is assumed to be independent of real GDP?
A. consumption B. saving C. investment D. profit
Refer to the above figure. Unexpected expansionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run
A) real GDP will be Y1, and the price level will be above P2. B) real GDP will be between Y1 and Y2, and the price level will be between P1 and P2. C) real GDP will be Y2, and the price level will be P2. D) real GDP will be Y1, and the price level will be P1.
In a competitive economy with no government sector: a. goods with spillover benefits will not be produced at all. b. there will be too few public goods produced
c. goods with spillover costs will be underproduced. d. too few resources be allocated to each industry.
Firms that are earning zero economic profits are
A. shutting down in the long run. B. breaking even. C. shutting down in the short run. D. earning less than a normal rate of return.