If the Fed buys a $1,000 U.S. government bond from a bank, it pays for it by giving the bank $1,000 in reserves—reserves that it simply creates out of thin air
a. True
b. False
Indicate whether the statement is true or false
True
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When the Fed fears inflation, the Fed ________ government securities, so that the federal funds rate ________ and the quantity of money ________
A) buys; rises; decreases B) sells; falls; increases C) buys; falls; increases D) sells; falls; decreases E) sells; rises; decreases
"The rigid link between monetary growth and inflation . . . had been broken." M1 grew faster in the deflationary 1980s than in the inflationary 1970s. Why?
A) The demand for money increased, reducing spending. B) The demand for money decreased, due to financial deregulation. C) The demand for money increased, as did velocity. D) The demand for money decreased and the Fed targeted the money supply.
In a business cycle, a period from trough to peak may be referred to as ________
A) a contraction B) an expansion C) a recurrence D) all of the above E) none of the above
This table shows the different combinations of goods that Jack can consume, given that his income to spend on these two items is $10.BundleNumber of popsiclesUtility from popsiclesNumber of ice cream conesUtility from ice cream conesA1070000B87201500C66502700D45503750E24004760F005760 Considering the information in the table shown, the bundle of goods that will derive the highest total utility for Jack is:
A. D. B. E. C. B. D. C.