One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money.
B. by increasing government spending.
C. by setting price ceilings on most goods so people can afford them.
D. None of these will help an economy in recession.
Answer: B
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An open market sale of securities by the Fed
A) decreases banks' reserves and increases banks' securities. B) increases banks' reserves and decreases banks' securities. C) increases banks' total assets. D) involves a bank selling government securities to the Fed.
Economies of scale can be caused by all of the following except:
A. price discounts for large scale purchases. B. labor specialization. C. use of more productive equipment. D. increases in the firm's average total cost.
Starting from equilibrium and using the ISLM framework, a decrease in investment leads to
A) lower interest rates and higher income. B) higher interest rates and higher income. C) lower interest rates and lower income. D) higher interest rates and lower income.
All of the following are non-price determinants of demand EXCEPT
A. number of consumers. B. price of raw materials used in production of the good. C. income. D. price of related goods.