Which of the following is a responsibility of the Federal Open Market Committee (FOMC)?
a. Levying direct and indirect taxes
b. Buying and selling U.S. government bonds
c. Setting the discount rate
d. Setting the minimum reserve ratio
b
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A majority of the commercial banks in the United States are members of the Fed
a. True b. False Indicate whether the statement is true or false
The difference between price elasticity of demand and income elasticity of demand is that
A) income elasticity of demand examines how an individual's income changes when prices change and the price elasticity of demand examines how quantity demand changes when price changes. B) income elasticity refers to the movement along the demand curve while price elasticity refers to a horizontal shift of the demand curve. C) income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price. D) income elasticity refers to a horizontal shift of the demand curve while price elasticity of demand refers to a movement along the demand curve.
If an increase in aggregate expenditures results in no increase in real GDP, we can surmise that the:
A. economy is in a deep recession. B. MPC equals 1. C. economy is already operating at full employment. D. price level has fallen.
In general, an increase in the price of a good:
A. will cause both an income and substitution effect. B. usually will have no effect. C. will cause the income effect to be bigger than the substitution effect. D. will cause the substitution effect to be bigger than the income effect.