The Fed's response to the zero lower bound problem was quantitative easing (or "QE"), where the Fed buys large amounts of bonds in order to:
A. Lower the interest rates
B. Increase banks' reserves
C. Lower bond prices
D. Reduce money supply
B. Increase banks' reserves
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Secular deflation occurs when
A) both aggregate demand and aggregate supply are shifting left. B) there is no economic growth and aggregate demand falls. C) aggregate demand increases at the same time there is no economic growth. D) aggregate demand remains unchanged while economic growth increases long-run aggregate supply.
The 2008 financial crisis peaked in September 2008, when Lehman Brothers declared bankruptcy
a. True b. False
The decline in output at the onset of the Great Depression was caused primarily by
a. a positive demand shock b. a negative demand shock c. a positive supply shock d. a negative supply shock e. simultaneous shocks to supply and demand
When adjusting nominal GDP for price changes, it is preferable to use the GDP deflator rather than the consumer price index because
a. the GDP deflator is calculated for a narrow market basket of goods, approximating those items included in our measure of consumption expenditures. b. the GDP deflator calculates changes in the prices of items that more closely approximate those included in GDP. c. the GDP deflator is always less than the consumer price index, and therefore, it is a more stable index. d. the GDP deflator is the sum of the consumer price index and the wholesale price index.