Describe the relationship between investment and the level of disposable income
Investment is autonomous with respect to disposable income. That is, the level of disposable income does not determine investment, but the level of the interest rate does. A decrease in the interest rate increases autonomous investment and an increase in the interest rate decreases autonomous investment.
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An open market operation involves
A) the Federal Reserve's purchase or sale of securities. B) the Federal Reserve's issuance of new stock. C) changing federal income tax rates. D) raising the debt limit of the United States.
A required reserve ratio of 7 percent gives rise to a simple deposit multiplier of
A) 14.29. B) 83.33. C) 1.43. D) 93. E) 7.
Describe a recent violation of the Wheeler-Lea Act of 1938
What will be an ideal response?
A rise in the interest rate
A. increases the opportunity cost of consuming today. B. decreases the opportunity cost of consuming today. C. increases the opportunity cost of consuming in the future. D. decreases the opportunity cost of consuming in the future.