Joe deposits $200 in currency into his checking account at a bank. This deposit is treated as:
A. A subtraction of $200 from the money supply because the $200 in currency is no longer in circulation
B. An addition of $200 to the money supply because of the creation of a checkable deposit of $200
C. An addition of $200 to the money supply because the bank holds $200 in currency and the checking account has been increased by $200
D. No change in the money supply because the $200 in currency has been converted to a $200 increase in checkable deposits
D. No change in the money supply because the $200 in currency has been converted to a $200 increase in checkable deposits
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When the economy is in a recession, the Fed can ________ the federal funds rate, which ________ aggregate demand and ________ real GDP
A) lower; increases; decreases B) raise; decreases; increases C) lower; increases; increases D) raise; increases; decreases E) lower; decreases; decreases
Adverse selection and moral hazard are examples of:
A) transaction costs B) information cost C) symmetric information D) financial market efficiency
Consider the money market drawn with the value of money on the vertical axis. If money demand is unchanged and the price level rises, then
a. the money supply must have increased, perhaps because the Fed bought bonds. b. the money supply must have increased, perhaps because the Fed sold bonds. c. the money supply must have decreased, perhaps because the Fed bought bonds. d. the money supply must have decreased, perhaps because the Fed sold bonds.
Refer to the above figure. For a normal good, the rightward shift of the curve could have been caused by
A. a decrease in income. B. a technological improvement. C. an increase in the cost of inputs. D. an increase in income.