An open-market purchase by the Federal Reserve injects excess reserves into the banking system and allows the money supply to expand
a. True
b. False
Indicate whether the statement is true or false
True
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If the market in the figure above is a profit-maximizing single-price monopoly, consumer surplus is the area ________
A) ABH B) BFGH C) ACG D) BCD E) ACE
Assuming everything else constant, what effect will each of the following have on the long-term real interest rate?
a. The expected inflation rate decreases. b. The default-risk premium increases. c. Investors expect future short-term interest rates to fall.
All of the following are examples of normative statements EXCEPT:
A. Low unemployment is more desirable than low inflation. B. High rates of economic growth are preferable to low rates. C. Output per person should increase at an average annual rate of 5 percent. D. Output per person typically grows more slowly than output per worker.
The U.S. Treasury yield curve:
A. always has a negative slope. B. always has a positive slope. C. assumes maturities are constant, and reflects the difference in risk. D. shows the relationship among bonds with the same risk characteristics but different maturities.