Which of the following monetary policies will increase money supply?
a. An increase in the discount rate
b. An increase in the reserve requirement
c. Open market purchases by the Fed
d. The Fed selling government bonds
e. An increase in the federal funds rate
c
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
What is government failure?
What will be an ideal response?
How is it logically possible for a monopolist to get different consumers to purchase different bundles on a menu (such as different sizes of coffee cups), and thereby achieve a form of price discrimination, even if the firm cannot observe the consumers' valuations directly? a. Different types of consumers have different tradeoffs between money and amounts of the good. b. The monopolist can use
a market-separation strategy. c. Social norms are powerful deterrents to lying about one's type. d. This is impossible: if one bundle is preferred by one type, logically it will be preferred by all.
The view that individuals weigh all available evidence when they formulate their expectations about economic events (including information concerning the probable effects of current and future economic policy) is called
a. the adaptive expectations hypothesis. b. the permanent income hypothesis. c. the rational expectations hypothesis. d. the Phillips curve.