The lending ability of commercial banks increases when the ________.
A. discount rate is raised
B. Fed buys securities in the open market
C. Treasury collects tax revenues
D. reserve requirement is raised
Answer: B
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Using Figure 11.1, which fiscal policy action would increase aggregate demand from AD1 to AD3?
A. A decrease in government spending. B. A decrease in government spending matched by an equal decrease in taxes. C. A decrease in transfer payments. D. A decrease in taxes.
Which of the following will result in the money market when the price level in an economy rises, while the supply of money remains unchanged?
What will be an ideal response?
(Last Word) The fallacy of composition is essentially the error of:
A. omitting relevant variables in constructing a model. B. reasoning from the general to the particular. C. confusing cause and effect in economic relationships. D. generalizing from the particular to the general.
The price elasticity of demand is the
A) percentage change in quantity demanded divided by the percentage change in price. B) change in quantity demanded divided by the change in price. C) percentage change in price divided by the percentage change in quantity demanded. D) change in price divided by the change in quantity demanded.