When the government fixes its exchange rate
a. it creates an unfavorable balance of trade
b. it creates trade surpluses
c. it does so to allow the exchange rate to reach equilibrium
d. it acts as an arbitrager
e. it is not unlike a government policy to control agricultural prices
E
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When the Fed supplies the banking system with an extra dollar of reserves, deposits increase by more than one dollar—a process called
A) extra deposit creation. B) multiple deposit creation. C) expansionary deposit creation. D) stimulative deposit creation.
Which of the following is true about poor populations?
A. The poor are more likely to have graduated from high school. B. There are fewer poor whites than poor blacks. C. The poor are disproportionately black and Hispanic. D. The poor are less likely to be children than the elderly.
Answer the following statements true (T) or false (F)
1) Asymmetric information in the health care market has increased the supply of health care. 2) A moral hazard problem arises in the health care market because health insurance encourages people to overconsume health care. 3) Insurance companies use deductibles and copayments to control increases in the amount of health care demanded. 4) Because employer payments for health insurance are not subject to income or payroll taxes, government in effect provides a subsidy to health care.
Suppose the marginal propensity to consume is 0.8. According to the model in the text, how much would equilibrium output go up if the government increased spending by $500 million (assuming all other factors are held constant)?
Select one: a. $400 million b. $625 million c. $900 million d. $2,500 million