Money serves as a medium of exchange when:
A. it is a means of holding wealth.
B. there is direct trade of goods and services.
C. it is a basic measure of economic value.
D. it is used to purchase goods and services.
Answer: D
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Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by
A. $8 billion. B. $15 billion. C. $20 billion. D. $13.3 billion.
Financial capital
A) depends on saving and borrowing decisions. B) is accumulated investment. C) depreciates each year. D) is another name for the machines and tools that businesses buy. E) is independent of physical capital.
Quantitative easing (QE) refers to:
A. information that a central bank provides to the financial markets regarding its expected future monetary policy path. B. a process similar to open-market sales. C. lending of reserves by the Federal Reserve to commercial banks. D. a process similar to open-market purchases.
Refer to the above figure. If real Gross Domestic Product (GDP) is $2 trillion, then
A) the level of total planned expenditures is less than real GDP. B) the level of total planned expenditures is greater than real GDP. C) the level of total planned expenditures equals real GDP. D) the level of total planned expenditures equals zero.