Suppose the money multiplier in the United States is 2.5. If the Fed wants to reduce the money supply by 1,000 it should:
A. sell government securities worth 400.
B. buy government securities worth 400.
C. sell government securities worth 250.
D. buy government securities worth 250.
Answer: A
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Traditionally, the Fed often communicated its intentions to restrict or expand monetary policy by announcing a change in its target for the ________.
A. consumer price index B. discount rate C. prime rate D. federal funds rate
Workers do not know the safety records at individual firms; they only know industry averages. As a result,
A) each firm tries to outdo each other in making safety improvements. B) each firm has the incentive to be the safest in its industry. C) the equilibrium level of safety is less than optimal. D) the optimal level of safety is achieved.
A multiperiod regression forecast h periods into the future based on an AR(p) is computed
A) the same way as the iterated AR forecast. B) by estimating the multiperiod regression Yt = ?0 + ?1Yt-h + ... + ?pYt-p-h+1 + ut, then using the estimated coefficients to compute the forecast h periods in advance. C) by estimating the multiperiod regression Yt = ?0 + ?1Yt-h + ut , then using the estimate coefficients to compute the forecast h period in advance. D) by first computing the one-period ahead forecast, next using that to compute the two-period ahead forecast, and so forth.
The short-run average variable cost curve
a. is always downward-sloping b. starts at the origin and always slopes upward c. starts above the origin and always slopes upward d. is a horizontal line intersecting the vertical axis e. slopes downward at low rates of output, then slopes upward at higher rates of output