What change in monetary policy could eventually cause overborrowing and overinvestment?
(A) Contractionary policy.
(B) An increase in the money supply.
(C) A fall in the discount rate.
(D) A decrease in the money supply.
Answer: (B) An increase in the money supply.
You might also like to view...
A deadweight loss occurs in a
A. market in which the market clearing price of a good is the same as the marginal cost of producing it. B. market in which the market clearing price of a good is below the marginal cost of producing it. C. monopoly. D. perfectly competitive market.
Place point X on the graph to indicate full employment, point Y to indicate economic growth and point Z to indicate a bad depression.
The supply curve of reserves is:
A) downward sloping. B) vertical. C) upward sloping. D) horizontal.
Suppose people value clean air more as their incomes increase, then
A) the marginal cost curve of pollution abatement to shift left, increasing the degree of air quality. B) the marginal cost curve of pollution abatement to shift right, increasing the degree of air quality. C) the marginal benefit curve of pollution abatement to shift right, increasing the degree of air quality. D) the marginal benefit curve of pollution abatement to shift left, increasing the degree of air quality.