If the Federal Open Market Committee (FOMC) decides to expand the money supply, then:
a. it will issue directions to sell U.S. government securities, thus increasing the velocity of circulation of the money supply.
b. it will issue directions to purchase U.S. government securities, thus putting more reserves in the hands of banks.
c. it will order new Federal Reserve notes delivered to member
banks.
d. it will raise the discount rate to member banks.
b
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Consider the market for turkeys. In the United States, because of Thanksgiving in the month of November,
A) there is a downward movement along the demand curve for turkeys. B) there is an upward movement along the supply curve for turkeys. C) the supply curve of turkeys shifts leftward. D) the demand curve for turkeys shifts leftward. E) neither the demand curve nor the supply curve shift; instead there is a movement along both curves.
An increase in the price level ________ real wealth, which causes consumption to ________
A) lowers; decrease B) raises; decrease C) lowers; increase D) raises; increase
The government deficit
A) is equal to the government surplus plus taxes minus government spending. B) is equal to GDP minus GNP. C) is equal to disposable income plus the current account surplus. D) is equal to the negative of government saving.
Menu costs:
A. increase during recession. B. decrease during recession. C. are the costs to firms of changing prices and communicating them to customers. D. are sunk costs and therefore should be disregarded.