Suppose the Federal Reserve wants to decrease the money supply by $100,000 . If the required reserve ratio is 0.1, which of the following actions will achieve the Fed's goal?
a. The Fed must purchase $100,000 in bonds.
b. The Fed must sell $100,000 in bonds.
c. The Fed must purchase $10,000 in bonds.
d. The Fed must sell $10,000 in bonds.
e. The Fed must sell $90,000 in bonds.
D
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The spending multiplier is:
a. 1 / (1 ? MPC). b. 1 ? MPC. c. MPC. d. MPC / (1 ? MPC).
Under EPA regulations, a factory
a. must pay for the right to pollute. b. can increase air pollution from its grinding process if it decreases air pollution from its smelting process. c. cannot under any circumstances build a polluting factory in an area where pollution standards are not being met by existing firms. d. None of the above is correct.
Which of the following expressions must be equal to national saving for a closed economy?
a. Y - I - G - NX b. Y - C - G c. Y - I - C d. G + C - Y
What two conditions must hold for a competitive market to produce efficient outcomes?
A. Demand curves must reflect all costs of production, and supply curves must reflect consumers' full willingness to pay. B. Supply curves must reflect all costs of production, and demand curves must reflect consumers' full willingness to pay. C. Firms must minimize production costs, and consumers must minimize total expenditures. D. Firms must maximize profits, and consumers must all pay prices equal to their maximum willingness to pay.