Answer the following statement(s) true (T) or false (F)
1. The government can influence the economy through its fiscal policy by making changes in the money supply.
2. When the Federal Reserve Bank buys or sells U.S. securities, it changes the level of reserves in the banking system, which has an effect on interest rates.
3. The discount rate is the interest rate banks are charged when they borrow money from the Fed.
4. The Fed relies primarily on changes in the reserve requirement (the minimum amount of money banks must hold in reserve to cover deposits) to ease or tighten the money supply.
1. False
2. True
3. True
4. False
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When the prices of U.S.-produced goods rise and the price of foreign-produced goods do not change, the result is
A) an increase in exports. B) a decrease in exports. C) a decrease in imports. D) no change in imports or exports.
The table above shows the transaction in Pinkland last year:
a) Calculate Pinkland's GDP. b) What approach did you use to make this calculation?
Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals
A) 2.00. B) 1.00. C) 0.50. D) 0.
Under perfect capital mobility
a. there are no restrictions on buying financial assets, though there may be on buying factories and equipment. b. transactions costs have to be zero. c. differential risk in assets across countries are minimal. d. All of the above e. None of the above