Changes in consumption and investment spending due to changes in the real interest rate alter:
A. induced expenditures.
B. the money supply.
C. autonomous expenditures.
D. money demand.
Answer: C
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Government debt "crowds out" private investment because
A) the government and private firms compete in the same market for savings. B) private firms stop borrowing money when the government enters the market. C) the government's increased demand for loans decreases interest rates. D) the government can order the public to buy bonds.
Refer to the figure above. What is the loss in the market-wide consumer surplus when the price of wine changes from $9 to $18?
A) $144,000 B) $30,000 C) $57,000 D) $0
If the excess reserves-to-deposit ratio decreases and the monetary base is unchanged, the value of the money multiplier will ________ and the value of the money supply will ________
A) decline; decline B) decline; increase C) increase; decline D) increase; increase
Which of the following is not a potential result of a price floor?
A) excess supply B) price greater than free-market equilibrium price C) Lower quality inputs are used, which increases marginal cost. D) all of the above