The Federal Reserve can increase the money supply by:
A. increasing the discount rate.
B. conducting open market sales.
C. reducing reserve requirements.
D. eliminating deposit insurance.
Answer: C
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Which of the following "externalities" does not distort the allocation of resources? I. An individual's unwillingness to cut his or her own lawn in an otherwise immaculately kept neighborhood. II. Smoke produced by a new firm in an area that raises the costs of other firms. III. A new firm's bidding up skilled wages in an area, thus raising costs of other firms. IV. An individual's unwillingness
to obtain job training, thereby lowering the total GNP. a. I, III, and IV. b. III and IV. c. III only. d. IV only.
When can two countries gain from trading two goods?
a. when the first country can only produce the first good and the second country can only produce the second good b. when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost c. when the first country is better at producing both goods and the second country is worse at producing both goods d. Two countries could gain from trading two goods under all of the above conditions.
Disposable income equals
A) income minus saving. B) income minus both saving and taxes. C) consumption minus taxes. D) the sum of consumption and saving. E) none of the above
Which of the following is FALSE?
A) A common market is more deeply integrated than an economic union. B) NAFTA is an example of a free trade area. C) The European Union is a deeper form of integration than NAFTA. D) Common markets allow for labor mobility between participating nations.