Which of the following is likely to be true if the Fed buys government bonds held by the U.S. commercial banks?
a. Banks will reduce the amount of loans, and this will increase the money supply in the economy.
b. Banks will give more loans, and this will increase the money supply in the economy
c. Banks will give more loans, and this will decrease the money supply in the economy.
d. Banks will reduce the amount of loans, and this will decrease the money supply in the economy.
b
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If the CPI was 132.5 at the end of last year and 137.5 at the end of this year, the inflation rate over these two years was
A) 3.6 percent. B) 3.8 percent. C) 5.0 percent. D) None of the above answers is correct.
Refer to the above figure. The rightward shift of the curve could have been caused by
A) a technological improvement. B) a technological setback. C) an increase in income. D) a decrease in income.
A firm increases output from 2 to 4 units per week. As it does its total costs rise from €1200 to €1500, while its fixed costs remain constant at €800. The firms MC is:
(a) €100. (b) €150. (c) €300. (d) Zero.
According to the rational expectations hypothesis, unemployment
A. may exist, and if it does, it will be temporary. B. only exists in the long run. C. may exist, and when it does, it stays for a long period of time. D. does not exist in the short run.