Deflation:
a. was prevalent during the oil shocks of the 1970s.
b. will cause consumers' purchasing power to shrink.
c. has been persistent in the U.S. economy since the Great Depression.
d. none of these.
d
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To fully analyze the effects of a tariff on imports of tomatoes, an economist needs
a. only to know the supply and demand curves in the market for tomatoes. b. only to know about supply and demand in the market for tomatoes and in markets for other products tomato farmers grow. c. to use general equilibrium analysis. d. to use a production possibilities curve.
The law of demand holds that as prices of goods decrease, people are willing to buy more.
Answer the following statement true (T) or false (F)
When the Fed buys bonds and injects additional reserves into the banking system, this action will
a. place downward pressure on short-term interest rates. b. cause many decision makers to expect that the future rate of inflation will fall. c. place upward pressure on both short-term and long-term interest rates. d. place upward pressure on short-term interest rates and downward pressure on long-term interest rates.
The Fed can directly protect a bank during a bank run by
a. increasing reserve requirements. b. selling government bonds to the bank. c. lending reserves to the bank. d. doing any of the above.