Which action could the Fed use to decrease the money supply?
A. an open market purchase
B. an increase in the required reserve ratio
C. a tax increase
D. a decrease in the discount rate
Answer: B
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Alice is willing to pay $3 for the second slice of pizza she eats. The price she pays is $2. Alice's consumer surplus for this slice of pizza equals
A) $0. B) $1. C) $2. D) $3.
George is considering buying shares of Intel. If the company does well, he will gain $100, but if the company does poorly, he will lose $100
George is risk averse, so for George the magnitude of the pain of losing $100 will ________ the pleasure of gaining $100. A) equal B) be less than C) be greater than D) None of the above answers are correct because we cannot compare the pain of losing to the pleasure of gaining.
Which of the following statements about two-part tariffs is false?
A) Because each individual has a different individual demand curve, if there is just one entrance fee some consumers will be able to reap some consumer surplus. B) The producer cannot capture the entire consumer surplus because the entrance fee might discourage some potential consumers even though they would have been willing to pay a lesser entrance fee. C) For two-part tariff pricing to be successful, the producer must be able to identify two distinct customer groups. D) Two-part tariff pricing allows a producer to capture the entire consumer surplus.
According to the Keynesian model, the optimal fiscal policy is to
a. increase cyclical but not structural deficits during a recession. b. reduce cyclical and structural deficits during a recession. c. increase structural deficits during an recession. d. maintain a balanced budget in case of national emergency.