What would likely have the most severe immediate effect on an economy?
A. A significant drop in exports
B. The Fed's infusing reserves into the economy
C. A failure of the financial sector
D. An aggregate demand shock
Answer: C
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A consumer chooses an optimal consumption point where the
a. marginal rate of substitution equals the relative price ratio. b. slope of the indifference curve equals the slope of the budget constraint. c. ratio of the marginal utilities equals the ratio of the prices. d. All of the above are correct.
What could the Fed do to increase the money supply?
a. lower the discount rate b. lower the reserve interest rate c. raise the reserve requirement d. sell government bonds
Which individual is out of the labor force?
a. Matthew is working 30 hours per week. b. Sandra is without a job, is able to work, and is actively looking for work. c. Ashley is working 6 hours per week. d. John is without a job, is able to work, but is not actively looking for work.
Which of the following is most likely to cause the long-run aggregate supply curve to shift rightward?
What will be an ideal response?