Suppose the required reserve ratio is 20 percent. If banks are conservative and choose not to loan all of their excess reserves, the real-world deposit multiplier is
A) less than 5. B) equal to 5. C) greater than 5. D) equal to 20.
A
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By fixing the exchange rate, the central bank gives up its ability to
A) adjust taxes. B) increase government spending. C) influence the economy through fiscal policy. D) depreciate the domestic currency. E) influence the economy through monetary policy.
Which of the following is NOT a common characteristic of oligopoly?
A) strategic dependence among firms in the industry B) product differentiation C) barriers to entry D) marginal cost pricing.
The aggregate demand curve will shift rightward when there is:
a. a decrease in government spending. b. a decrease in incomes abroad. c. a tax increase. d. the expectation that future consumer income will rise.
If a perfectly competitive firm is producing at its profit-maximizing output in the short run and fixed costs decline, the firm should
A. Use less capital but increase output by hiring more labor. B. Not change output. C. Increase output. D. Reduce output.