Frictional unemployment may be economically beneficial if:
A. the social costs are limited to smaller tax revenues collected.
B. its psychological costs are borne only by the unemployed worker.
C. it leads to a better match between worker and job.
D. losses in economic output are small.
Answer: C
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If the federal funds rate falls below the discount rate, banks will decrease their borrowings from __________ and __________ their borrowings from __________. It follows that when one bank borrows from __________, reserves in the banking system __________
A) other banks; increase; the Fed; another bank; remain unchanged B) the Fed; decrease; other banks; another bank; remain unchanged C) other banks; increase; the U.S. Treasury; the Treasury; increase D) the Fed; increase; other banks; another bank; remain unchanged E) none of the above
The Fed sells German bonds to commercial banks. Which of the following best describes the impact on the Fed's and the Banking System's balance sheets resulting from this transaction?
A. The Fed's assets and liabilities do not change, only the compositions of the assets change. For the banking system, assets and liabilities increase. B. The Fed's assets increase and its liabilities both increase. For the banking system, the value of assets and liabilities do not change, only the composition of assets changes. C. The Fed's assets and liabilities both decrease. For the banking system, the value of assets and liabilities do not change, only the composition of assets changes. D. The Fed's assets and liabilities increase, the banking systems assets and liabilities decrease.
An increase in the budget deficit can be reflected in
A) an increase in private saving. B) a reduction in investment. C) a reduction in net exports. D) all of the above E) none of the above
The GDP deflator
A. Is the price index based on a fixed basket of goods and services for the government. B. Is the broadest price index, covering all output. C. Is the best measure of inflation for consumers. D. Reflects the price changes felt by producers but not consumers.