When the Fed lowers the discount rate, it makes it
a. cheaper for banks to borrow from each other.
b. cheaper for banks to obtain additional reserves by borrowing from the Fed.
c. more difficult for banks to accept deposits.
d. more difficult for banks to extend loans.
B
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When an economy's actual output is smaller than its potential at some point in time, we say that it is experiencing:
A. a positive output gap. B. a negative output gap. C. inflation. D. deflation.
Marxists and leaders of communist economies actually often admire the market mechanism for its
a. efficiency in allocation of resources. b. fairness in distribution of output. c. maximization of net benefits for consumers. d. effectiveness in achieving high rates of growth.
Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?
If the price level rises, what will happen to aggregate supply curve?
A. It will shift outward. B. It will shift inward. C. Nothing. D. It will get steeper. E. It will get flatter.