To increase the money supply
A) the Federal Reserve should sell government securities.
B) the Federal Reserve should reduce its loans to banks.
C) the Federal Reserve should buy government securities.
D) the commercial banks should reduce their loans.
C
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When market participants have rational expectations,
A) they use all information available to them. B) they only slowly adjust their expectations to news which could affect prices or returns. C) they are less likely to make accurate forecasts than if they have adaptive expectations. D) they are able to forecast interest rates more accurately than inflation rates.
Which of the following will increase the total amount of reserves banks are holding?
A. A bank increases the number of loans to firms and households. B. A bank borrows reserves from the Federal Reserve. C. A bank attracts new customers depositing funds into their checkable deposits. D. The Federal Reserve reduces the reserve requirement.
The price controls on consumer goods during World War II led to
A. permanent surpluses. B. stable long-term prices. C. a burst of inflation when they were ended. D. increased production of consumer goods to satisfy demand.
White-collar employment has risen sharply since the introduction of computers, so clearly the
A. output effect has outweighed the substitution effect. B. substitution effect has outweighed the output effect. C. substitution and output effects are equal.