The classical approach to a downturn in the business cycle was for the government to do nothing
a. True
b. False
Indicate whether the statement is true or false
True
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In the long run, the real interest rate is 3 percent, real GDP grows at 4 percent, velocity is constant, and the quantity of money grows at 8 percent. The nominal interest rate is
A) 7 percent. B) 12 percent. C) 10 percent. D) 8 percent. E) 6 percent.
Apples are a normal good, so if the price of an apple increases from 50¢ to 60¢, the quantity of apples demanded decrease because of
A) the substitution effect only. B) the income effect only. C) a change in income. D) the substitution and income effects.
In the simple deposit expansion model, a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed
A) sold $200 in government bonds. B) sold $500 in government bonds. C) purchased $200 in government bonds. D) purchased $500 in government bonds.
When business is profitable, corporate managers will prefer plowback rather than other sources of funding.
Answer the following statement true (T) or false (F)