Which of the following statements would Milton Friedman agree with concerning the conduct of monetary policy?
A. Information lags are short, enabling the central bank to respond quickly to changes in the economy.
B. Wage and price adjustments are relatively slow, so changing the money supply will have a minimal impact on the real economy.
C. There is little uncertainty over the effect of a change in the money supply on the economy.
D. There are long and variable lags between monetary policy actions and their economic results.
Answer: D
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If the economy is in recession and the number of used baby clothing stores increases, then:
a. used baby clothes are a necessity. b. used baby clothes are an inferior good. c. used baby clothes are a normal good. d. new baby clothes are a luxury. e. used baby clothes have price-elastic demand.
If a single banks faces a required reserve ratio of 20 percent, has total reserves of $500,000 . and checkable deposit liabilities of $400,000 . what is the maximum amount of money this bank could create (add to the money supply)?
a. $420,000 b. $100,000. c. $80,000 d. $2,100,000.
The No-Good Company produces goods that provide damages to society-at-large. If consumers of No-Good's products fail to take external benefits into account
A. the demand curve will be too far to the right. B. the supply curve will be too far to the left. C. the demand curve will be too far to the left. D. the supply curve will be too far to the right.
Indifference curves can never cross on a preference map.
Answer the following statement true (T) or false (F)