When the Fed buys government securities, it:
A. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
B. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
C. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
D. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
Answer: C
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All of the following make the use of fiscal policy less attractive EXCEPT
A) expansionary fiscal policy tends to cause inflation and offsets some of the increased consumer spending. B) that it cannot be effective, unless it is accommodated with expansionary monetary policy. C) the substantial margin of error in the value of the multiplier. D) the legislative lag, which is the time it takes for Congress and the President to pass and implement the measure. E) the crowding out effect, which is the decrease in private spending that occurs due to increased government spending.
The fixed basket of Econoland consists of 10 units of A, 20 units of B, and 30 units of C. Current prices are $1 per unit of A, $2 per unit of B, and $3 per unit of C. Base year prices are $1 for each unit of A, B, and C. What is the CPI in the current year?
A) 140 B) 43 C) 233 D) 430 E) 100
From a macroeconomic perspective, the problem of low household saving has probably been overstated because:
A. household saving has been increasing steadily over the last three decades. B. it is national saving, not household saving, that allows an economy to accumulate new capital. C. household saving is not related at all to an economy's ability to accumulate new capital. D. household saving represents a smaller share of national saving than does public saving.
There has been an increase in the demand for chicken. This change can be shown graphically as a:
A. shift in the demand curve to the left. B. movement along the demand curve to the left. C. shift in the demand curve to the right. D. movement along the demand curve to the right.