Which of the following sequence of events follows an open market sale by the Fed?
A. r? ? I? ? AE? ? Y?
B. r? ? I? ? AE? ? Y?
C. r? ? I? ? AE? ? Y?
D. r? ? I? ? AE? ? Y?
Answer: D
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The government deficit is equal to
A) new money created minus new borrowing from the public. B) new borrowing from the public plus new money created. C) new borrowing from the public divided by new money created. D) new borrowing from the public minus new money created.
"When the Fed is concerned with an inflationary gap it buys government securities." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
Voluntary exchange requires that there must be mutual gain.
Answer the following statement true (T) or false (F)
Which of the following questions would require positive analysis?
a. If the price of cotton increases by 5 percent, should we buy a new harvester? b. If the price of cotton increases by 5 percent, how much cotton should we farm? c. If the price of cotton decreases by 6 percent, what effect will this have on demand? d. If the price of cotton decreases by 6 percent, should we plant more wheat?