When the Federal Reserve purchases a government bond from a primary dealer, reserves in the banking system ________ and the monetary base ________, everything else held constant
A) increase; increases
B) increase; decreases
C) decrease; increases
D) decrease; decreases
A
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If an increase in investment of $50 causes an increase in real GDP of $250, the value of the spending multiplier is:
A. 5. B. 0.20. C. 0.80. D. 10.
Briefly explain the loan able funds theory of interest rate determination
What will be an ideal response?
Monopolistic competition resembles pure competition because:
A. both industries emphasize nonprice competition. B. in both instances firms will operate at the minimum point on their long-run average total cost curves. C. both industries entail the production of differentiated products. D. barriers to entry are either weak or nonexistent.
The type of unemployment created by the normal rate of reentry and entry into the labor force is
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.