The smaller the reserve ratio the:
A. less a bank can loan out.
B. smaller is the money multiplier.
C. less money is created in the economy.
D. greater the money is created in the economy.
D. greater the money is created in the economy.
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If sales in an industry decline,
a. demand for additional labor also declines. b. demand for additional labor increases. c. demand for additional labor stays the same. d. the unemployment rate definitely falls.
Assume that a large capital-abundant country trades only two goods with the rest of the world, medical equipment and corn. Medical equipment is relatively capital-intensive. An increase in the country's endowment of capital will cause the price of medical equipment relative to the price of corn to
A. rise at first and then fall. B. fall. C. stay the same. D. rise.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.
The government spending multiplier is likely to be smaller during periods of
A. low output and high unemployment. B. high output and low unemployment. C. low output and low unemployment. D. high output and high unemployment.