In the United States, the money supply (M1) consists of:
a. paper currency and coins.
b. coins, paper currency, checkable deposits, and traveler's checks.
c. paper currency, coins, checkable deposits, and savings deposits.
d. government bonds, currency, checkable deposits, and traveler's checks.
b
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Refer to Table 4-8. Suppose that the quantity of labor supplied increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
A) W = $9.00; Q = 410,000 B) W = $9.50; Q = 420,000 C) W = $8.00; Q = 390,000 D) W = $8.50; Q = 400,000
If two economists disagree on an issue and their disagreement is based on personal value judgments, then this controversy is a normative one
a. True b. False
Which of the following helps explain why the aggregate quantity demanded of goods and services is inversely related to prices within the framework of the AD/AS model?
a. As prices fall, domestic consumers have an incentive to buy more of the cheaper goods and services. b. As prices fall, the monetary authorities will have to increase the money supply, which will lead to an increase in the quantity of goods and services purchased. c. As prices fall, the government will have to reduce taxes, which will lead to an increase in the quantity of goods and services purchased. d. As prices fall, the wealth of people holding the fixed quantity of money increases, causing them to expand their purchases of goods and services.
Compared to an independent central bank, elected officials are likely to:
A. favor long-run stability over short-term prosperity. B. choose monetary policies that are overly accommodative. C. prefer interest rates to vary more often. D. sacrifice short-term growth to keep future inflation low.