If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decrease taxes
b. decrease the discount rate
c. sell government bonds
d. all of the above
b
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A decrease in the quantity of reserves held by commercial banks could be the result of
A) a decision by U.S. households to hold less currency. B) the sale of government securities by the Federal Reserve. C) a decrease in the government's budget deficit. D) an increase in the exchange rate.
The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator wants to set the price so that Bigshow earns the same normal profit as a perfectly competitive firm, what price should be set?
A) $8 B) $6 C) $4 D) $2
For the short-run Phillips curve to remain relatively stable, then changes in real GDP must occur primarily as a result of shifts in: a. changes in aggregate demand
b. changes in real wages caused by changes in the supply of labor. c. changes in inflationary expectations. d. changes in aggregate supply.
If the MPC = 1, the spending multiplier is:
A. infinite. B. zero. C. 1. D. 10.