In the above figure, suppose the economy is in short-run equilibrium at point D. Which of the following is the best policy option for the Fed?
A. open market purchase of government securities
B. Increase the required reserve ratio.
C. Increase taxes.
D. Increase government spending.
Answer: A
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
"Americans hate broccoli." "Because so few Americans like broccoli, average broccoli sales are lower in America then anywhere else." Which of these two statements about the preferences of Americans is more accurate? Why?
What will be an ideal response?
John takes 10 minutes to iron a shirt and 20 minutes to type a paper. Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?
a. Harry has a comparative advantage in ironing. b. Harry has a comparative advantage in typing. c. Harry has an absolute advantage in typing. d. Harry has an absolute advantage in ironing. e. Neither can gain from specialization and exchange.
Factors of production are:
A.) the laws that regulate manufacturers. B.) the technological innovations available to companies. C.) the resources used to create output. D.) the waste left over after goods are produced.