The appropriate monetary policy in the event of a recessionary gap would be to
A. engage in an open market purchase of U.S. government securities.
B. raise the required reserve ratio.
C. increase the difference between the federal funds rate and the required reserve ratio.
D. increase the difference between the discount rate and the federal funds rate.
Answer: A
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There is no completely satisfactory way to define the money supply in the United States because
A) data on the money supply are always approximate and only available after a time lag of several months. B) much of it is held by the public and so cannot be monitored by the Fed. C) the Federal Reserve uses a number of different definitions. D) the liquidity of any asset is a matter of degree.
Briefly explain the similarities and differences of decision making by the market sector and the public sector
What will be an ideal response?
Special-interest groups:
a. are more likely to be well-informed about "their" issue than the general public b. may consist of a congressional district c. may support policies that are harmful to the general public d. all of the above
The idea that tradeoffs have to be made when resources are scarce is reflected in the fact that:
A. the slope of a linear production possibilities is constant. B. the production possibilities curve has a negative slope. C. points below the production possibilities curve are efficient. D. points below the production possibilities curve are inefficient.