The Fed can use all of the following except ________ to change the lending capacity of the banking system.
A. the reserve requirement
B. the discount rate
C. open market operations
D. the excess reserve requirement
Answer: D
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
_____ is measured in terms of current-year prices
a. Nominal gross domestic product (GDP) b. GDP price index c. Real gross domestic product (GDP) d. Arbitrage e. Depreciation
Dean borrows $400 from Tim. Tim wants to make a 10% real return on his money, so they both agree on a 10% interest rate paid next year. Dean and Tim did not anticipate any inflation, yet the actual inflation turned out to be 4% next year. In this case
A. Tim is better off. B. Dean is better off. C. Tim will receive more than 10% of real rate of return a year from now. D. Dean will pay $56 a year from now on.
The appreciation of the U.S. dollar relative to the British pound would make a vacation trip to:
A. The United States less expensive for the British B. London less expensive for Americans C. London more expensive for Americans D. The United States of equal value for the British as a vacation trip to London for Americans