Graphically illustrate and explain what effect a purchase of bonds by the Federal Reserve will have on the money market
What will be an ideal response?
A Fed purchase of bonds will cause an increase in H and an increase in the money supply. At the initial interest rate, there will be an excess supply of money. The interest rate will fall to restore money market equilibrium. All else fixed, there will be no change in money demand.
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Taxes can have an important effect on
A) saving. B) economic growth. C) the labor supply. D) all of the above
If the income multiplier is equal to 5, then a $1 initial increase the country's exports will lead to a
a. 5 percent decrease in national income b. 5 percent increase in national income c. $5 decrease in national income d. $5 increase in national income e. 0.05 percent increase in national income
Obstacles that restrict trade, either domestic or international, will
a. reduce output, income, and the general living standard of the populace. b. help people achieve higher income levels. c. help promote high rates of economic growth. d. encourage domestic business firms to expand output so they can achieve larger gains from the adoption of mass production techniques.
Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. The benefit to Matt of buying his books at the university bookstore instead of online is:
A. $9 B. $175 C. $5 D. $170