If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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Suppose a bank has the following balance sheet:
Assets Liabilities Reserves $14,000 Deposits $100,000 Loans $90,000 Net Worth $4,000 If the required reserve ratio is 10 percent, how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?
An unanticipated decline in investment demand within the new classical model will cause
a. the price level to fall with no effect on output. b. output to fall with no effect on the price level. c. both the price level and output to fall. d. no change in either the level of price or output.
A die is rolled. If it lands 1 or 2, the person receives $90. If it 3 or 4, the person receives $30.00. If it lands 5 or 6, the person receives $60. If the person is willing to pay $60 to take this gamble, they must be
a. risk-averse. b. risk-neutral. c. risk-preferring. d. either risk-neutral or risk-preferring (not risk-averse).
If the Fed were to unexpectedly increase the money supply, creditors would gain at the expense of debtors
a. True b. False Indicate whether the statement is true or false