In the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP, then GDP decreases
a. True
b. False
Indicate whether the statement is true or false
True
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The various signaling techniques __________ completely overcome the moral hazard problem in the case of the small borrower, so that small business loans are generally __________-term
A) can; long B) can; short C) cannot; long D) cannot; short
If the price of tennis rackets were to increase, we would expect: a. the demand for tennis balls to increase
b. the demand for tennis balls to decrease. c. the supply of tennis balls to increase, leading to a movement along the demand curve for tennis balls. d. the supply of tennis balls to decrease.
The 45-degree income line is the same as the aggregate expenditure curve
Indicate whether the statement is true or false
An increase in the discount rate:
A. reduces the cost of reserves borrowed from the Fed. B. signals the Fed's desire to increase the money supply. C. signals the Fed's desire to lend increased reserves to banks. D. increases the cost of reserves borrowed from the Fed.