The primary tool the Federal Reserve uses to increase the money supply is
A) printing more money.
B) lowering the required reserve ratio.
C) buying Treasury securities.
D) lowering the discount rate.
Answer: C
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Use the graph below to answer the next question.
Other things equal, an increase in the price of substitute resource would cause a
A. move from a to b on D1. B. shift from D2 to D3 assuming the substitution effect exceeds the output effect. C. move from b to a on D1. D. shift from D3 to D2 assuming the substitution effect exceeds the output effect.
Misspecification of functional form of the regression function
A) is overcome by adding the squares of all explanatory variables. B) is more serious in the case of homoskedasticity-only standard error. C) results in a type of omitted variable bias. D) requires alternative estimation methods such as maximum likelihood.
Monetarists believe that
a. velocity is independent of the money supply b. the transactions demand for money influences the velocity of money c. the economy does not always operate at full employment d. velocity is constant if the money supply is constant e. velocity varies directly with the money supply
Most of the world's population lives in
A. North America. B. the LDCs. C. Western Europe. D. the NICs.