Economists who believe that the economy has a strong self-correcting mechanism argued that, after September 11, 2001, the economy needed
A. a quick and expansionary fiscal policy stimulus.
B. a quick and expansionary monetary policy stimulus.
C. only a short time to return to equilibrium full employment.
D. President Bush to propose a large budget stimulus package.
Answer: C
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Return to the case of education and the job market from the previous question. Which condition would be consistent with both types' obtaining an education in equilibrium?
a. cH < w < cL. b. cL < w < cH. c. cH < cL < w. d. w < cL < cH.
Refer to Scenario 1. Immediately following Sheila's $100,000 deposit into her checking account, Perez Bank
A) has no excess reserves. B) has $10,000 in excess reserves. C) has $90,000 in excess reserves. D) has $100,000 in excess reserves.
Assume that banks do not hold excess reserves, all deposits remain in the banking system and that the required reserve ratio is 20%. If one bank obtains excess reserves of $10,000, then the maximum increase in money supply is
A) $10,000. B) $20,000. C) $40,000. D) $50,000.
Over many years the capital stock in the United States has grown to approximately
A. $40 trillion. B. $90 trillion. C. $20 trillion. D. $80 trillion.