Suppose there currently is an inflationary gap. What could the government do to bring the overall price level down?
A) nothing
B) Reduce government spending.
C) Increase government spending.
D) Reduce the nation's aggregate supply.
B
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On a typical acre of land, Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year. On a typical acre of land, Nebraska can produce 150 pounds of beef or 200 pounds of soybeans. Which of the following is correct?
A) Nebraska should produce soybeans because its opportunity cost of soybeans is lower. B) Nebraska should produce soybeans because its opportunity cost of soybeans is higher. C) Iowa should produce soybeans because its opportunity cost of soybeans is lower. D) Iowa should produce soybeans because its opportunity cost of soybeans is higher. E) Nebraska and Iowa should divide each acre evenly between soybean and beef production.
If expectations are rational, the difference between the actual inflation rate and the forecast for inflation is: a. positive when inflation is increasing
b. negative when inflation is increasing. c. random. d. greater, the more accurately people anticipate the effects of government policy.
The required reserve ratio is
a. the minimum fraction of vault cash balances that banks must hold as reserves. b. the minimum fraction of all assets that banks must hold as reserves. c. the minimum fraction of all liabilities that banks must hold as reserves. d. the minimum fraction of checking account balances that banks must hold as reserves. e. the minimum fraction of loans that banks must make sure are repaid.
The rent earned on marginal land is
a. zero. b. the average of all qualities of land. c. above the average of all qualities of land. d. below the average of all qualities of land.