What is quantitative easing? What was the Fed's objective in implementing quantitative easing?
What will be an ideal response?
Quantitative easing is a policy when a central bank attempts to stimulate the economy by buying long-term securities. The Fed's objective was to reduce the interest rates on mortgages and on 10-year Treasury notes. Lower interest rates on mortgages could help to spur new home sales. And lower interest rates on 10-year Treasury notes could help to lower interest rates on corporate bonds, thereby increasing investment spending on physical capital.
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Which of the following would not cause any kind of an outward shift of a nation's production possibilities curve [PPC]?
a. An improvement in the general level of education b. Technological innovation c. Discovery of a new source of energy d. An increase in the size of the labor force e. A flood that renders thousands of acres of farmland unusable
Tax revenues can rise as a result of a decrease in income tax rates, as long as the tax base increases sufficiently
Indicate whether the statement is true or false
Suppose that a perfectly competitive industry is in long-run equilibrium. The price of a complement good decreases. What will happen?
A. Next period a typical firm will earn positive economic profit. B. Next period a typical firm will increase output. C. Eventually firms will exit the industry. D. both a and b E. all of the above will happen
Give an example that shows price elasticity of supply. Avoid using examples from the text.
What will be an ideal response?