The money supply is
A. the amount of money in circulation.
B. the rate at which the Federal Reserve Board creates money.
C. limited to currency and coins.
D. the rate at which the Federal Reserve Board prints currency.
Answer: A
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Which of the following would be most likely to induce Congress and the president to conduct expansionary fiscal policy? A significant
A) decrease in oil prices. B) increase in consumption spending. C) decrease in investment spending. D) increase in net exports.
In the middle of a severe recession, Congress passes an increase in the level of unemployment benefits. This would be considered by economists as a
a. positive tax. b. negative tax. c. form of government purchases. d. variable tax.
Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift
a. aggregate demand right. b. aggregate demand left. c. aggregate supply right. d. aggregate supply left.