If an economy's aggregate expenditure line crosses the 45-degree line at a level below potential GDP, then there exists an inflationary gap
a. True
b. False
Indicate whether the statement is true or false
False
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When the Fed fears inflation, the Fed ________ government securities, so that the federal funds rate ________ and the quantity of money ________
A) buys; rises; decreases B) sells; falls; increases C) buys; falls; increases D) sells; falls; decreases E) sells; rises; decreases
Which of the following statement is untrue?
A) assets equal liabilities plus net worth B) households and firms are lenders and borrowers in the flow of funds C) government regulation is the major cause of asymmetric information problems D) pension funds and insurance companies are financial intermediaries
External debt is that portion of the national debt
a. held by private investors. b. held by the Federal Reserve. c. that the United States does not intend to repay. d. held by foreigners.
If reserves increase by $7 million and the required reserve ratio is 12%, what is the resulting change in checkable deposits (or the money supply), assuming that there are no cash leakages and that banks hold zero excess reserves?
A) $0.84 million B) $7.95 million C) $5.83 million D) $58.33 million