In the recent financial and economic crises, the economy fell into a so-called liquidity trap, which means that:
A. Banks did not have enough reserves to continue lending to banks
B. The Fed injected reserves into the banking system, but the interest rates remained high
C. Firms did not want to borrow from banks because they had little need for extra liquidity
D. Banks held on to excess reserves and people chose to pay off loans rather than spend
D. Banks held on to excess reserves and people chose to pay off loans rather than spend
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If a firm raised its price and discovered that its total revenue fell, then the demand for its product is
A) relatively elastic. B) perfectly inelastic. C) perfectly elastic. D) relatively inelastic.
According to Rosenberg (2004), the U.S. economy between the Civil War and World War II was relatively poor in which of its productive resources?
(a) Land (b) Labor (c) Capital (d) Entrepreneurial talent
The money multiplier is approximated as being equal to:
A. one divided by the reserve ratio. B. one divided by the federal funds. C. demand deposits multiplied by the interest rate. D. demand deposits multiplied by the reserve ratio.
If the demand for loanable funds shifts to the left, then the equilibrium interest rate
a. and quantity of loanable funds rises. b. and quantity of loanable funds falls. c. rises and the quantity of loanable funds falls. d. falls and the quantity of loanable funds rises.