The function of providing liquidity by financial intermediaries:
A. includes depositors withdrawing funds but not borrowers.
B. affects people who need to borrow and depositors who withdraw their funds.
C. only affects customers with savings accounts.
D. only considers people who borrow on a short-term basis, but not depositors.
Answer: B
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Refer to Figure 17-2. Suppose the Fed used contractionary policy to push short-run equilibrium to point C. If the short-run equilibrium remained at point C long enough,
A) the economy would move back to point A. B) the economy would stay at point C in the long run. C) the short-run Phillips curve would shift down. D) the short-run Phillips curve would shift up.
When future events cannot be assigned probabilities, we are talking about
A) risk. B) uncertainty. C) a clouded future. D) financial risk.
Which of the following statements is likely to be made by an economist who believes in activist monetary policy? (1 ) The more closely monetary policy can be designed to meet the particulars of a given economic environment, the better. (2 ) Because of long and uncertain time lags, activist monetary policy may be destabilizing rather than stabilizing. (3 ) There is sufficient flexibility in wages
and prices in modern economies to allow the economy to equilibrate in reasonable speed at the natural level of Real GDP. (4 ) The "same-for-all-seasons" monetary policy is the way to proceed. (5 ) There is evidence that monetary policy in the mid-1970s caused a recession. A) (1), (2), and (3) B) (1), (4), and (5) C) (1 ) and (5) D) (4 ) and (5) E) (1), (3), and (4)
Politicians are often heard saying that tuition at state universities should be kept low "to make education equally accessible to all residents of the state, regardless of income." Assuming that state funding for the universities is held constant, what condition will prevail if tuition is held below equilibrium price? Will education really be "equally accessible" under these conditions?
What will be an ideal response?