The Federal Reserve Bank is the U.S. central bank:
A. who holds, in reserve, all financial assets of banks.
B. who holds, in reserve, all financial liabilities of banks.
C. whose assets serve as cash in the United States.
D. whose liabilities serve as cash in the United States.
Answer: D
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When the economy is in a recession, ________ taxes decrease while ________ spending increases and, as a result of this automatic fiscal policy, aggregate demand ________
A) induced; discretionary; is not changed B) needs-tested; induced; decreases C) induced; needs-tested; increases D) discretionary; induced; is not changed E) discretionary; needs-tested; increases
In the short run, a firm that is operating at a loss has two options. These options are
A) to go out of business or declare bankruptcy. B) to reduce output or reduce its variable costs. C) to shut down temporarily or continue to produce. D) to adopt new technology or change the size of its physical plant.
Countries that have high rates of savings also have
A) high rates of investment. B) low rates of investment. C) stock market bubbles. D) low rates of growth. E) no international trade.
In 1944 the U.S. economy was temporarily operating at point _________.
A. A
B. B
C. C
D. D