Ceteris paribus, the money supply becomes smaller when
A. The Federal Reserve reduces the reserve requirement.
B. An individual deposits currency into her transactions account.
C. A bank uses its excess reserves to make a loan.
D. A loan is repaid to the banking system by a bank customer.
Answer: D
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
If production technological interdependency exists, the ________ integration of the successive production stages ________ production costs.
A) vertical; increases B) vertical; can reduce C) horizontal; can reduce D) horizontal; doubles
If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good
a. True b. False Indicate whether the statement is true or false
In the Ricardian model, wages are equal across industries because:
a. employers care for their workers. b. workers prefer to work in exporting industries. c. workers are freely mobile between industries. d. workers are freely mobile between countries.