When the Fed extends loans to depository institutions
A) it increases the level of reserves.
B) it decreases the level of reserves.
C) it reduces the total value of the assets on its balance sheet.
D) it reduces the total value of the liabilities on its balance sheet.
A
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Three basic decisions must be made by all economies. What are they?
What will be an ideal response?
Politicians often instruct households to spend in order to help the economy. This advice overlooks the fact that
a. increases in consumption will make it easier for households to deal with unanticipated future expenses.
b. increases in consumption will provide more loanable funds for investment.
c. you cannot have a strong economy if all or most households are spending just about everything they earn.
d. consumer spending is less than two-thirds of GDP.
Professor Tabarrok suggests that the most important thing to understand about the AD curve is that:
A. changes in monetary or fiscal policy are incapable of shifting the AD curve. B. changes in inflation can rotate the AD curve. C. changes in spending growth can shift the AD curve. D. changes in real GDP growth cause movement along the AD curve.
Marginal cost
A. Is the change in total cost associated with a one-unit increase in production. B. Is the change in total output from hiring one more factor of production. C. Is the change in the total cost when hiring one more factor of production. D. Falls when there are diminishing returns.