When the CPI rises ________, the inflation rate is ________
A) rapidly; low
B) rapidly; high
C) steadily; zero
D) slowly; high
E) rapidly; either high, low, or zero depending on whether production of output is increasing, decreasing, or not changing.
B
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Suppose that, for every 1 percentage point decline in the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve Banks. Also assume that the reserve requirement is 10%. If the Fed lowers the discount rate from 4.0% to 3.5%, bank reserves will ________.
A. increase by $1 billion and the money supply will increase by $10 billion B. decline by $1 billion and the money supply will decline by $10 billion C. increase by $1 billion and the money supply will increase by $5 billion D. increase by $10 billion and the money supply will increase by $100 billion
Refer to Table 4-7. If a minimum wage of $12.50 is mandated there will be a
A) shortage of 40,000 units of labor. B) surplus of 80,000 units of labor. C) shortage of 80,000 units of labor. D) surplus of 40,000 units of labor.
Perfectly competitive firms that earn an economic profit in the short run choose the output that
a. maximizes total revenue b. minimizes total cost c. maximizes the difference between total revenue and total cost d. maximizes the difference between total revenue and explicit cost e. maximizes the difference between total revenue and implicit cost
An increase in the marginal propensity to import will cause
A) the multiplier to increase and a given change in government spending (G) to have a larger effect on domestic output. B) the multiplier to increase and a given change in government spending (G) to have a smaller effect on domestic output. C) the multiplier to decrease and a given change in government spending (G) to have a larger effect on domestic output. D) the multiplier to decrease and a given change in government spending (G) to have a smaller effect on domestic output.