Which of the following will NOT happen when the Federal Reserve buys bonds from the public in the open market and cash in the hands of the public does not change?
A. The required reserve ratio will increase.
B. The money supply will increase.
C. The deposits of commercial banks will increase.
D. Commercial bank reserves will increase.
A. The required reserve ratio will increase.
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A politician states "taxes should be raised to provide more spending on school lunch programs." This is ____________
Fill in the blank(s) with the appropriate word(s).
If the inflation rate is negative, the price level in an economy is
A) falling. B) rising slowly. C) constant. D) rising rapidly.
The absolute value of the slope of the production possibilities curve at any point:
A) gives the price of the good on the vertical axis that must be given up to attain an additional unit of the good on the horizontal axis. B) is found by dividing the horizontal change by a vertical change. C) gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. D) gives the price of the good on the horizontal axis relative to the price of the good on the vertical axis.
Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be:
A. 0E and 0B respectively. B. 0F and 0A respectively. C. 0F and 0C respectively. D. 0G and 0B respectively.