When the Fed wants to expand the money supply through open market operations, it:
a. sells government securities
b. purchases government securities.
c. increase the Fed Funds rate.
d. decrease reserve requirements.
b
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Both demand and supply curves usually have positive slopes
a. True b. False Indicate whether the statement is true or false
The opportunity cost of holding money
A. is based on the fiduciary monetary system. B. is measured by the alternative interest yield obtainable by holding some other asset. C. equals the amount paid for renting a house instead of buying it. D. refers to the amount of paper currency held by the Fed.
If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then maximum profit
A) equals $336. B) equals $882. C) equals $1,218. D) cannot be determined solely from the information provided.