Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 12.5%. If the Fed buys $20 million worth of government securities from the public, the change in the money supply will be
A. $20 million.
B. $125 million.
C. $160 million.
D. $250 million.
Answer: C
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An improvement in production technology will
A. shift the demand curve to the left. B. shift the supply curve to the left. C. shift the supply curve to the right. D. increase equilibrium price.
The figure above shows the market for education, a good possessing an external benefit. In order to attain the efficient number of students, a government subsidy must equal ________ per student
A) $2,000 B) $8,000 C) $6,000 D) $10,000 E) $16,000
According to the monetarists,
a. stable growth in the money supply is needed for economic stability. b. aggregate demand is unstable, mostly because of unstable investment demand. c. there is a need for fiscal policies to stabilize output. d. stable money growth is not needed for the economy to be stable.
If the managers of Happy Avocados, a ready-made guacamole firm, spend considerable time researching different prices and quality measures offered by multiple avocado farmers, the time spent is considered to be a(n) ________ cost.
A) information B) negotiation C) monitoring D) enforcement