Suppose the money multiplier in the United States is 2.5. If the Fed wants to reduce the money supply by 1,500 it should:
A. raise the discount rate by 2 percentage points.
B. buy government securities worth 600.
C. sell government securities worth 600.
D. raise the required reserve ratio to 0.2.
Answer: C
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Which of the following did not result in economic growth?
a. Installing a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of southern California b. Cyrus McCormack inventing a threshing machine for harvesting grains c. After World War II, the U.S. instituting the GI bill, which provided education subsidies to soldiers being released from service duty d. Many citizens emigrating from a nation when a politically repressive regime takes office
If the supply curve for housing is perfectly inelastic, a reduction in demand will cause the equilibrium price to: a. rise and the equilibrium quantity to fall
b. rise and the equilibrium quantity to stay the same. c. fall and the equilibrium quantity to fall. d. fall and the equilibrium quantity to stay the same.
In an expansion,
a. federal budget deficits tend to rise b. federal budget deficits tend to fall c. the federal debt tends to rise faster than in a recession d. federal government tax receipts tend to fall e. there is pressure on the Fed to monetize the debt
Because many resource prices are set by long-term contracts, in the short run
a. costs will increase by more than product prices when demand increases. b. costs will decrease when the demand for products increases. c. costs will increase by less than product prices when demand increases. d. costs will decrease by more than product prices when demand decreases.