Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the
a. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds.
b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds.
c. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds.
d. money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds.
c
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The principle that states that what matters to people is the real value or purchasing power of money is the
A) marginal principle. B) spillover principle. C) real-nominal principle. D) principle of diminishing returns.
Stabilization policy refers to attempts to
A) shift the AD curve to smooth short-run fluctuations in output. B) shift the SRAS curve to smooth short-run fluctuations in output. C) shift the AD curve to keep the price level as low as possible. D) shift the SRAS curve to keep the nominal interest rate as low as possible.
The development of a low-cost synthetic fuel is expected to cause a decrease in the price of oil
a. True b. False Indicate whether the statement is true or false
Figure 3-16
Refer to . When the price falls from P2 to P1, producer surplus
a.
decreases by an amount equal to C.
b.
decreases by an amount equal to A + B.
c.
decreases by an amount equal to A + C.
d.
increases by an amount equal to A + B.