If the Fed decides to use an open market operation to reduce the money supply by $1 million, and if the money multiplier is 10, then what total amount of Treasury securities must the Fed initially sell?
A. $10,000,000.
B. $1,000,000.
C. $100,000.
D. $10,000.
Answer: C
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A. suppliers of U.S. dollars in B. suppliers of Euros in C. demanders of U.S. dollars in D. supplied Euros by the Fed for use in
Banks prefer to make loans than keep reserves because they earn interest on loans and must pay interest on reserves
Indicate whether the statement is true or false
The marginal cost curve is
A) downward sloping to reflect the bowed out PPF. B) downward sloping as marginal benefits increase. C) upward sloping because marginal cost falls as more of a good or service is produced. D) upward sloping to reflect the increasing opportunity cost of producing one more unit. E) U-shaped to reflect the bowed out PPF.
Which of the following is likely to cause a rise in the wage rate and a decrease in the number of workers hired in a garage?
A) The shutdown of a nearby garage B) A decrease in the price of the services provided by the garage C) An increase in the price of the services provided by the garage D) The opening of a new garage nearby that offers higher wages to its workers