A currency drain is
A) when the Fed buys securities, but it is not when the Fed sells securities.
B) when the Fed raises the required reserve ratio.
C) an increase in currency held outside banks.
D) when the Fed either buys or sells securities.
E) when the Fed sells securities, but it is not when the Fed buys securities.
C
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In an inflationary expenditure gap, the equilibrium level of real GDP is
A. equal to full-employment real GDP. B. greater than full-employment real GDP. C. greater than planned investment. D. less than full-employment real GDP.
Richard Bland quit his job as an accounting professor to start his own restaurant. He gave up a salary of $50,000 per year and withdrew $100,000 in bank CDs earning 5 percent to buy a building and equipment. In the restaurant’s first year it had direct expenses of $75,000 and revenues of $150,000. The restaurant’s economic profit was
A. $15,000. B. $20,000. C. $75,000. D. not possible to determine from the information given.
________ facilitate the use of money for transactions in the economy.
a. Banks b. Consumers c. Companies d. Governments
One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money. B. by increasing government spending. C. by setting price ceilings on most goods so people can afford them. D. None of these will help an economy in recession.