Which of the following is true?
a. The money supply will tend to fall when the Fed pays a higher interest rate on bank reserves
b. If banks never wanted to hold excess reserves, decreasing the interest rate the Fed pays on reserves would not increase the money supply.
c. If banks hold excess reserves, the actual money multiplier would be less than potential money expansion.
d. All of the above are true
d
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
The theory of comparative advantage suggests that trade should happen
a. between economies with small differences in opportunity costs of production. b. between economies with large differences in opportunity costs of production. c. between economies with large differences in specialization. d. between economies with small differences in specialization.
The goals of equity and ________________ are sometimes in conflict.
A. fairness B. efficiency C. capital
A monopoly price reflects a good’s marginal utility.
Answer the following statement true (T) or false (F)