The country of Zincosa is in an economic slump with a very high unemployment rate. The stock market has crashed, and business confidence is at a low. Interest rates have fallen to 0.05, and the economy is in a liquidity trap. Facing such a crisis, the central bank of the country decides to purchase billions of dollars in bank debt and securities. Which of the following factors would most likely
have influenced the central bank to take such a step?
a. The crash of the stock market
b. A high rate of inflation
c. A low rate of inflation
d. The low interest rates
d
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The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. The equilibrium wage rate is ________ an hour and the quantity of labor employed is ________ hours per day
A) $5; 600 B) $25; 200 C) $15; 400 D) None of the above answers is correct.
The Federal Reserve
a. designs tax policy. b. enforces the nation's antitrust laws. c. sets the nation's monetary policy. d. analyzes data on workers.
Refer to the information. The operational lag of fiscal policy is reflected in event(s):
Answer the question on the basis of the following sequence of events involving fiscal policy: (1) The composite index of leading indicators turns downward for three consecutive months, suggesting the possibility of a recession. (2) Economists reach agreement that the economy is moving into a recession. (3) A tax cut is proposed in Congress. (4) The tax cut is passed by Congress and signed by the president. (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover. A. 1 and 2. B. 2 and 3. C. 3 and 4. D. 5.
What does the quantity theory of money imply? If the growth rate of money supply and growth rate of real GDP in an economy are 8% and 6%, respectively, then what is the inflation rate in the economy?
What will be an ideal response?