Commercial banks create new money:
A. through multiple rounds of lending.
B. by issuing checks.
C. when they buy government bonds from the Federal Reserve.
D. when they increase their desired reserve/deposit ratio.
Answer: A
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The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) equals: a. 0.5
b. the multiplier. c. the slope of the consumption function. d. 1.0. e. the slope of the saving function.
The phrase "a weaker U.S. dollar" means that the dollar
a. has been depreciating b. has been appreciating c. is not in equilibrium on the foriegn exchange market d. is fluctuating greatly e. buys less than one unit of a foreign currency
If an unanticipated decrease in aggregate demand results in an output below the economy's long-run capacity, long-run equilibrium will eventually be restored by
a. an increase in the rate of inflation. b. lower resource prices and lower real interest rates. c. higher resource prices and higher real interest rates. d. a decrease in the natural rate of unemployment.
Total surplus in a market is consumer surplus minus producer surplus
a. True b. False Indicate whether the statement is true or false