The Board of Governors of the Federal Reserve System can increase commercial bank reserves by:
A. Increasing the discount rate
B. Increasing the reserve ratio
C. Increasing the size of its term auction facility
D. Selling government securities in the open market
Answer: D. Selling government securities in the open market
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A "flat tax" on personal income, in which the same tax rate is applied to every dollar of income earned by each taxpayer, is an example of
A) a regressive tax. B) a proportional tax. C) a progressive tax. D) a value-added tax.
If people have adaptive expectations, the Phillips curve model implies that whenever the actual rate of inflation is higher than the expected rate of inflation: a. unemployment will exceed its natural rate
b. unemployment will be less than its natural rate. c. unemployment will increase. d. unemployment will decrease.
The present discounted value of a future payment can be calculated using which of the following formulas?
A. (Current payment) ÷ [(1 + Interest rate) N]. B. (Future payment) ÷ [(1 + Interest rate) N]. C. [(1 + Interest rate) N] ÷ (Future payment). D. [(1 + Interest rate) N] ÷ (Current payment).
Assume there are no taxes or imports. The government estimates that between 2012 and 2013 disposable income decreased by $400 billion and consumption expenditure decreased by $280 billion. Based on this data, the multiplier equals:
a) 0.33 b) 0.7 c) 1.42 d) 3.33