The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would tend to offset each other in trying to achieve that objective?
A. Selling government securities and raising the discount rate
B. Selling government securities and raising the reserve ratio
C. Buying government securities and raising the discount rate
D. Buying government securities and lowering the reserve ratio
C. Buying government securities and raising the discount rate
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When, because of hiring and firing costs, firms retain workers in a recession that they would otherwise lay off, there is said to be
A) labor hoarding. B) a decline in capacity utilization. C) voluntary unemployment. D) involuntary unemployment.
__________ bidders in a Treasury auction are guaranteed their bids at the __________ price resulting from the auction
A) Competitive; market-clearing B) Noncompetitive; highest C) Competitive; lowest D) Noncompetitive; market-clearing
The price elasticity of demand for a linear demand curve follows the pattern (moving from high prices to low prices)
a. elastic, unit elastic, inelastic. b. unit elastic, inelastic, elastic. c. inelastic, unit elastic, elastic. d. elastic, inelastic, unit elastic.
What is the relationship between interest rates and demand for money?
(A) As interest rates decrease, demand for money increases. (B) Interest rates and demand for money are unrelated. (C) As interest rates increase, demand for money increases. (D) Interest rates are determined by demand for money.