Which of the three basic economic questions deals with choosing the correct mix of output?
A.) What to produce.
B.) How to produce.
C.) For whom to produce.
D.) How much to charge.
A.) What to produce.
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From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009, the huge expansion in the Fed's balance sheet and the monetary base did not result in a large increase in monetary supply because
A) most of it just flowed into holdings of excess reserve. B) the Fed also increased the required reserve ratio. C) the Fed also conducted open market sales. D) the discount loan decreased.
By the life-cycle hypothesis, a cyclical boom which causes inflation to accelerate and thus causes people to ________ the real value they estimate their wealth to represent, leads them to ________ the proportion of their current income devoted to
consumption, which turns out to be a ________ influence on the economy. A) lower, reduce, stabilizing B) lower, increase, destabilizing C) raise, increase, stabilizing D) raise, reduce, stabilizing E) raise, reduce, destabilizing
If we observe a decrease in the price of a good and an increase in the amount of the good bought and sold, this could be explained by a(n):
a. increase in the supply of the good. b. increase in the demand for the good. c. decrease in the demand for the good. d. decrease in the supply of the good.
Mikey likes bagels, so he buys an old pizza shop for $150,000 and spends $10,000 installing new equipment which will allow him to make bagels instead of pizza. How will Mikey's recent purchases affect GDP?
A. Investment will increase $160,000. B. Investment will increase $150,000, and consumption will increase $10,000. C. Consumption will increase $150,000, and investment will increase $10,000. D. Investment will increase $10,000.