One of the reasons that expansionary monetary policy was not as effective as expected in recent years is that banks:
A. purchased Treasures with the reserves that the Fed added to their accounts.
B. loaned reserves that the Fed added to banks.
C. returned reserves that the Fed added to banks.
D. held onto the reserves that the Fed added to banks.
Answer: D
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What impact does a decrease in the price level in the United States have on net exports and why?
A) A decrease in the price level reduces net exports because lower prices increase American spending on imports. B) A decrease in the price level increases net exports because lower prices increase the value of the dollar. C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. D) A decrease in the price level increases net exports by reducing the relative cost of American goods.
By driving up interest rates, an increase in investment spending causes
a. a voluntary decrease in consumption b. a voluntary increase in consumption c. an involuntary decrease in consumption d. an involuntary increase in consumption e. government spending to be crowded out
If the Federal Reserve wishes to increase the money supply by $30,000 and the reserve requirement ratio is 0.4, how big a purchase of bonds will the Fed need to make?
a. $75,000 b. $12,000 c. $1,000 d. $30,000 e. $3,000
The most basic concept in economics is
A) wealth. B) income. C) scarcity. D) human need.