The above diagram has a demand for money curve. Suppose the Fed initially sets the quantity of money equal to $0.6 trillion. Draw the supply of money curve in the figure
What is the equilibrium interest rate? Now suppose the Fed increases the quantity of money to $0.9 trillion. Draw the new supply curve. What is the new equilibrium interest rate?
The initial supply of money curve is MS1 and the equilibrium interest rate is 6 percent. When the Fed increases the quantity of money, the supply of money curve shifts to MS2 and the equilibrium interest rate falls to 4 percent.
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Transfer payments have reduced poverty among the elderly, but poverty among females has not fallen
a. True b. False
Historical evidence seems to indicate that
A. budget and trade deficits generally move in the same direction. B. there is no consistent relationship between trade and budget deficits. C. trade and budget deficits decrease when the president is a Republican, and increase when the president is a Democrat. D. budget and trade deficits generally move in the opposite direction.
The cyclically adjusted budget deficit for the United States:
A. rose to -7.1 percent of potential GDP in 2009 but has since declined. B. was zero in 2009, but the cyclical deficit created by the recession was -7.1 percent of potential GDP. C. changed to a surplus in 2009. D. rose to -10.1 percent of potential GDP in 2009 but has since declined.
The quantity supplied of a good:
A) is inversely related to the price of the good. B) is determined irrespective of the market price. C) is always equal to the quantity demanded of the good. D) is the amount of the good that sellers are ready to supply at a given price.