If the reserve ratio is 10 percent, the money multiplier is
a. 100.
b. 10.
c. 9/10.
d. 1/10.
b
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When a firm builds a new factory, this is an example of an investment in
A. the market. B. physical capital. C. research and development. D. human capital.
Are business inventory changes always planned? Give an example to support your argument
When comparing the Keynesian and monetarist approaches, the only substantive difference is that
a. the Keynesian equation leads to a prediction of real GDP; the monetarist equation leads to a prediction of nominal GDP. b. Keynesians concentrate on aggregate demand and monetarists concentrate on aggregate supply. c. Keynesians approach aggregate demand by multiplying the money supply by velocity, while monetarists use the equilibrium conditions of the expenditure schedule. d. Keynesian analysis suggests that money affects consumption first while monetarist analysis suggests that money affects investment spending first.
According to the Taylor rule:
a. if inflation falls by 1 percentage point below its target of 2 percent, then the Fed should raise the real federal funds rate by one-half a percentage point. b. all of these are appropriate Fed actions. c. when real GDP is equal to potential GDP and inflation is equal to its target of 4 percent, the federal funds rate should be kept at 2 percent. d. if real GDP rises by 2 percent above potential GDP, the Fed should raise the real federal funds rate by 1 percentage point.