Laws, customs, conventions, and other institutional elements that sustain an economy fall under the category of
a. rules of the game
b. human capital
c. natural resources
d. financial institutions
e. capital infrastructure
A
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
At the moment, the Federal Reserve keeps the discount rate above the fed funds rate. In so doing, they are
A) discouraging commercial banks from borrowing from the Fed. B) encouraging commercial banks to borrow from each other. C) doing both A and B. D) doing none of the above.
When there are few unemployed resources, additional spending will tend to
a. flow directly to the unemployed resources, so that the multiplier can be maintained at 1/1-mpc. b. increase the marginal propensity to consume, and thereby increase the size of the multiplier. c. increase the demand for resources and drive prices downward, increasing the size of the multiplier. d. bid resources away from other activities and drive prices upward, reducing the size of the multiplier.
What is the criticism leveled against deposit insurance by the FDIC?
What will be an ideal response?