Assume a demand deposit multiplier of 2 and a government expenditure of $10 million. If the Treasury borrows that much from the banking system, bank reserves will
A) rise by $2 million.
B) rise by $10 million.
C) rise by $20 million.
D) remain unchanged.
D
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In what ways is the Fed independent of the political process?
What will be an ideal response?
When an economy experiences strong economic growth,
a. the number of families in the bottom 10 percent of the income distribution decreases b. the income of families in the bottom of the income distribution increases c. only the top of the income distribution is affected d. the accompanying inflation cancels out any change in income distribution e. the rich are no better off because taxes rise with income
An open-market sale
a. increases the number of dollars and the number of bonds in the hands of the public. b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public. c. decreases the number of dollars and the number of bonds in the hands of the public. d. decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.
(Consider This) Which of the following methods is used by farmers to "hedge" against short- run price and output fluctuations?
A. Securing prices for their output in the futures market. B. Purchasing crop revenue insurance to insure against natural disasters. C. Leasing land to other farmers in return for stable rent payments. D. All of these risk-management techniques are used.