The discount rate is the rate the Federal Reserve charges banks for loans. By lowering this rate, the Fed provides banks with a greater incentive to borrow from it
a. True
b. False
Indicate whether the statement is true or false
True
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For a good whose production creates a pollution, when marginal social cost equals marginal social benefit, then
I there is no pollution. II resources are utilized efficiently. A) I only B) II only C) neither I nor II D) both I and II
The population of Parminder’s country has been growing rapidly. What can be assumed about her country?
a. Workers are becoming more educated. b. The average citizen has a higher standard of living. c. It has greater output than before. d. Wages are at subsistence levels.
If aggregate production in the economy exceeds aggregate purchases
A. firms are producing more during the year than they are selling. B. unintended inventory investment is negative. C. the economy is operating at a real GDP greater than equilibrium GDP. D. saving must be negative.
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.