The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?
A. Selling government securities and raising the discount rate
B. Selling government securities and lowering the discount rate
C. Buying government securities and lowering the discount rate
D. Buying government securities and raising the reserve ratio
C. Buying government securities and lowering the discount rate
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When a sales tax is imposed on sellers, the supply curve shifts so that the vertical distance between the old and the new supply curve equals the
A) sales tax multiplied by the price elasticity of demand. B) sales tax multiplied by the price elasticity of supply. C) amount of the sales tax. D) sales tax divided by the price elasticity of demand.
What is one difference between stocks and bonds?
A) Bonds are purchased at a bank, while stocks are purchased through the federal government. B) Bonds earn a higher rate of return than stocks. C) Stocks earn a higher rate of return than bonds. D) Stocks represent partial ownership in a firm, while bonds do not.
The primary cause of frictional unemployment is:
A. discouraged workers who give up looking for work. B. fluctuations in aggregate demand. C. the lack of training and marketable qualifications in job seekers. D. inaccurate information about job opportunities.
Labor productivity is defined as:
A. total output/worker-hours. B. nominal GDP minus real GDP. C. the ratio of real capital to worker-hours. D. the annual increase in nominal GDP per worker.