The Fed’s founders viewed the Fed as a means of maintaining the money supply during economic contractions and as a lender of last resort.
Answer the following statement true (T) or false (F)
True
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"Last month unemployment fell to 4 percent, its lowest level in years. The economy is growing rapidly, but consumer prices have risen at an annual rate of 10 percent during the last six months." Which of the following policies would be most appropriate under these circumstances?
a. An increase in both government spending and taxes. b. An increase in taxes. c. A reduction in taxes. d. An increase in government spending.
A change in technology that increases the marginal physical product of an input will: a. shift the input demand curve to the left
b. shift the input demand curve to the right. c. result in a movement down along the input demand curve. d. result in a movement up along the input demand curve.
Let the marginal leakage rate be 0.5 while the marginal propensity to consume is 0.8. Then a $50 million reduction in autonomous taxes will cause autonomous consumption to ________ and equilibrium income to ________
A) fall by $50 billion; fall by $100 billion B) rise by $50 billion; rise by $100 billion C) fall by $40 billion; fall by $200 billion D) rise by $40 billion; rise by $80 billion
Government price setting _____
a. prevents firms from lowering their prices b. creates barriers to entry c. helps enforce collusion among industry members d. all of the above