According to the interest-rate-based transmission mechanism, a decrease in the money supply will
A. lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
B. lead to a decrease in investment spending and a decrease in real GDP which is greater than the decrease in investment spending.
C. lead to an increase in investment spending and a decrease in real GDP which is greater than the increase in investment spending.
D. lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending.
Answer: B
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Which of the following entities was blamed in part for the speculative activity leading to the crash of 1929?
(a) Large manufacturing enterprises (b) Brokers and their firms who extended loans to customers interested in buying stocks on the margin (c) The Federal Reserve System (d) New mom and pop businesses
Laws that make it illegal to require union membership as a condition of continuing employment in a firm are
A) union shop laws. B) right-to-work laws. C) closed-shop laws. D) jurisdictional laws.
The narrowest definition of the money supply (M1) includes
a. cash and travelers' checks. b. cash, travelers' checks, and savings account balances. c. cash, checking account balances, and travelers' checks. d. cash, bank deposits, and money market accounts.
Refer to Figure 2.3. At a price of $10 per CD, there would be:
A. excess supply of 70 thousand CDs.
B. excess demand of 50 thousand CDs.
C. excess supply of 50 thousand CDs.
D. excess demand of 70 thousand CDs.