Which of the following is the sequence of events following a contractionary monetary policy?
A) Money demand increases ? interest rates increase ? planned investment falls and aggregate output falls.
B) Interest rates increase ? planned investment decreases ? aggregate output decreases ? money demand decreases.
C) Interest rates decrease ? planned investment decreases ? aggregate output decreases ? money demand decreases.
D) Aggregate output falls ? the demand for money falls ? interest rates rises ? planned investment decreases.
Answer: B) Interest rates increase ? planned investment decreases ? aggregate output decreases ? money demand decreases.
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An increase in the demand for workers producing computers for export versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from:
A. the diminishing marginal product of labor. B. increasing reservation prices. C. the diminishing marginal product of capital. D. globalization.
Which of the following appears to be evidence against the public interest view of the Fed's motivation?
A) The conflict with the Treasury over interest rate fixing during World War II. B) The failure of the Fed to emphasize the goal of price stability. C) The unwillingness of the Fed to turn over its excess profits to the Treasury. D) The independence of Fed chairmen from the authority of the President.
The market demand is the:
A. horizontal sum of all individual demand curves in a market. B. horizontal sum of all individual prices in a market. C. sum of all individual demand curves and supply curves in a market D. vertical sum of all individual demand curves.
Explain why a bank manager and a bank regulator would likely view the timing at which a loan should be charged to the loan loss reserve differently.
What will be an ideal response?