The best example of monetary policy is which of the following?
A. the Fed lowering interest rates
B. the federal government cutting taxes
C. the government increasing purchases
Ans: A. the Fed lowering interest rates
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Which one of the following statements about growth theories is CORRECT?
A) In the new growth theory, knowledge is not subject to diminishing returns. B) In neoclassical growth theory, technological progress is the result of rapid increases in saving and investment in capital per person. C) In classical growth theory, real GDP per person is unrelated to the subsistence real GDP. D) In classical growth theory physical resources are unlimited.
Monopolistically competitive firms
A) have market power because they can set price above marginal cost. B) have no market power because they earn zero economic profit. C) have no market power because of free entry. D) have no market power because price equals marginal cost.
The Granger Causality Test
A) uses the F-statistic to test the hypothesis that certain regressors have no predictive content for the dependent variable beyond that contained in the other regressors. B) establishes the direction of causality (as used in common parlance) between X and Y in addition to correlation. C) is a rather complicated test for statistical independence. D) is a special case of the Augmented Dickey-Fuller test.
If the Fed was trying to reduce demand-pull inflation, it might:
a. sell government securities, lower reserve requirements and lower the discount rate. b. sell government securities, raise reserve requirements and raise the discount rate. c. sell government securities, lower reserve requirements and raise the discount rate. d. buy government securities, lower reserve requirements and raise the discount rate.