A new financial innovation results in people switching their funds from checking deposits to savings accounts. The quantity of M1 ________ and the quantity of M2 ________.
What will be an ideal response?
decreases
does not change
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If the marginal propensity to save (MPS) is 1/8, the value of the simple spending multiplier is: a. 8
b. 1/8. c. 2. d. 1/2. e. 4.
In a recession, typically
A) unemployment rises. B) the employment-to-population ratio decreases. C) the employment-to-population rate rises. D) the labour force participation rate rises. E) both A and B are correct.
For the period from 2030 through 2085, the annual deficits of Medicare (in present value terms) run approximately
A. $0. B. $200 billion per year. C. $50 billion to $100 billion per year. D. $3 trillion per year.
Which of the following statements is true?
A) Nonactivists argue that monetary and fiscal policies should be deliberately used to smooth out the business cycle. B) Fine-tuning consists of the usually frequent use of monetary policy to counteract even small undesirable movements in economy activity. C) Keynesians would be more likely to advocate contractionary monetary policy to correct an inflationary gap than expansionary monetary policy to correct a recessionary gap. D) b and c E) a, b and c