In a simplified banking system subject to a 25 percent required reserve ratio, a $1,000 open-market purchase by the Fed would cause the money supply to:
A. increase by $1,000.
B. decrease by $1,000.
C. decrease by $4,000.
D. increase by $4,000.
Answer: D
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In the figure below, the economy is initially in long-run equilibrium at point A. If there is an adverse supply shock that reduces potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then there is initially ________ gap and the short-run aggregate supply curve will ________. 
A. an expansionary: eventually shift to SRAS" B. a recessionary; eventually shift to SRAS' C. an expansionary; eventually shift to SRAS' D. a recessionary; eventually shift to SRAS"
If a decrease in income leads to an increase in the demand for sardines, then sardines are
A) a necessity. B) an inferior good. C) a normal good. D) a neutral good.
If it turned out that labor supply was relatively elastic then who would bear the greater burden of the payroll tax and why?
What will be an ideal response?
A firm needs to maximize the value to all of its
A) managers. B) employees. C) suppliers. D) stakeholders.