An increase in the supply of bonds
A) raises the interest rate and increases equilibrium quantity of bonds.
B) raises the interest rate and decreases equilibrium quantity of bonds.
C) lowers the interest rate and decreases equilibrium quantity of bonds.
D) lowers the interest rate and increases equilibrium quantity of bonds.
Ans: A) raises the interest rate and increases equilibrium quantity of bonds.
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A single bank is severely limited in its ability to create money because: a. the FDIC will not permit it to create money unless the Resolution Trust Corporation guarantees the loans. b. loan recipients usually take the proceeds of the loan in cash
c. the funds loaned probably will be deposited in another bank. d. recent federal legislation prohibits banks from creating money except to finance international trade.
Government demand-management policies that are used to try to increase the equilibrium level of output in the economy are known as
a. expansionary policies. b. fiscal dividends. c. output policies. d. laissez-faire policies.
Developing infrastructure and ensuring that property rights will be protected can help a poor country grow more quickly according to de Soto's book The Other Path.
Answer the following statement true (T) or false (F)
Economists agree that the structure of the Consumer Price Index has some problems that limit its usefulness as a reliable measure of inflation. What is one of these drawbacks?
A. It ignores changes in consumption patterns brought about by changes in the relative prices of consumer goods. B. It is based on the faulty assumption that each consumer buys only one unit of each item. C. It is based on a market basket of mail-order items and does not include the goods that consumers typically purchase. D. It is based on the faulty assumption that consumption choices are not influenced by income levels.