Required reserves are the portion of deposits banks are required to hold and not lend to customers
Indicate whether the statement is true or false
TRUE
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Use the following graphs to answer the next question.
In the graphs, the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. A shift in the aggregate demand curve from AD3 to AD2 can be achieved by Federal Reserve action to ________.
A. buy government securities in the open market B. increase the reserve requirement C. sell government securities in the open market D. increase the discount rate
Comment on the following statement: "The shape of the long-run average cost curve is determined by diminishing returns."
What will be an ideal response?
Assume perfect capital mobility. Under a fixed exchange rate system, expansionary fiscal policy causes income to _____, while under flexible exchange rates expansionary fiscal policy causes income to _____
a. increase; increase b. increase; remain unchanged c. increase; decrease d. remain unchanged; increase
Government provides a nonexcludable public good that no one wants. This situation is most closely related with:
A) government solving a market failure. B) government failure. C) market failure. D) the market solving a government failure.