Assume a money multiplier of 3. If the Treasury finances a $30 million expenditure by selling securities to the Fed, the money supply could ultimately
A) rise by $3 million.
B) rise by $10 million.
C) rise by $30 million.
D) rise by $90 million.
D
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If the average variable cost of the fifth hat is $50, then the total variable cost of five hats is
A. $10. B. $250. C. $1,800. D. indeterminate from this information.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Assume that your nominal wage was fixed at $25 an hour, and the price of gasoline fell from $4.00 to $1.50. In this case, your real wage (in terms of gasoline) has
A. decreased to $6.25. B. increased to $10. C. decreased to $16.66. D. increased to $16.66.
Recall the Application. The rise in commodity prices corresponded with ________ in interest rates, and this change in interest rates would result in bond prices ________
A) a decrease; falling B) an increase; falling C) an increase; rising D) a decrease; rising