During a bank crisis:
A. a bank will go to the central bank for a loan before going to other banks.
B. it is easy to determine the market prices of bank's assets.
C. officials at the Federal Reserve find it easy to sort out solvent from insolvent banks.
D. it is important for regulators to be able to distinguish insolvent from illiquid banks.
Answer: D
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Which of the following factors is likely to increase the amount of available labor and decrease the real wages of workers?
A) in increase in the supply of capital stock B) a large number of factory closings C) consumers demanding more goods D) a high influx of immigration
Over time, technology tends to:
A. set countries apart in terms of productivity. B. allow developing nations to experience the "catch-up" effect. C. diminish in nations that are still developing. D. spread from country to country, equalizing opportunity costs.
Nowadays, most observers believe that monetary policy
a. is less important than fiscal policy. b. is more important than fiscal policy. c. and fiscal policy are equally important. d. and fiscal policy are both unimportant.