Refer to the graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The interest rate in the economy is 4 percent. What should the Fed do to achieve a noninflationary full-employment level of real GDP?
A. Increase the money supply from $75 to $150 billion
B. Increase the money supply from $150 to $225 billion
C. Decrease the money supply from $225 to $150 billion
D. Make no change in the money supply
C. Decrease the money supply from $225 to $150 billion
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The United States experienced depressions in all of the following decades except
A. the 1890s. B. the 1920s. C. the 1930s. D. the 1950s.
The quantity demanded is always equal to the quantity supplied
Indicate whether the statement is true or false
A consumption tax is a tax on
a. goods but not on services. b. the amount of income that people spend. c. the amount of income that people earn. d. the amount of income that people save.
If m equals the maximum number of new dollars that can be created for a single dollar of excess reserves and R equals the required reserve ratio, then for the banking system:
A. R = m - 1. B. m = R - 1. C. m = 1/R. D. R = m/1.