Exhibit 10-1 Aggregate supply curve
In Exhibit 10-1, there are plenty of idle resources and no upward pressure on prices in:
A. the segment labeled ab.
B. the segment labeled bc.
C. the segment labeled cd.
D. both segment bc and segment cd.
Answer: A
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In the IS-LM model, an increase in government spending in the goods market has an impact on the money market because
a. it increases the money supply. b. it increases income, which increases money demand. c. it decreases income, which decreases money demand. d. it increases interest rates, which decreases money demand. e. none of the above.
The length of time that represents the long run
a. is greater than one year b. is greater than six months c. is longer in service industries than in manufacturing d. is the same for all industries e. varies from industry to industry
The Federal Reserve (Fed) was criticized for playing a role in causing the Great Recession. Which of the following criticisms most accurately captures this criticism?
a. The Fed kept monetary policy loose for too long, thereby fueling speculation in the housing market. b. The Fed kept monetary policy too tight immediately after the 2001 recession and then loosened it just prior to the recession, thereby precipitating the crisis. c.The Fed relaxed banking regulations after the 2001 recession, causing banks and other financial institutions to engage in speculative activities for which they were unprepared. d. The Fed encouraged home ownership by putting pressure on Fannie Mae and Freddie Mac.
Citizens can consume more of everything in a(n)
A. open economy. B. closed economy. C. economy with many citizens. D. autarky.