If the Fed conducts an open market purchase of bonds, the
a. money supply decreases as reserves are injected into the banking system
b. demand for money increases as reserves are drained from the banking system
c. demand for money decreases as reserves are injected into the banking system
d. money supply increases as reserves are injected into the banking system
e. money supply increases as reserves are drained from the banking system
D
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Sandra routinely uses currency to purchase her groceries. She is using money as a medium of exchange
a. True b. False Indicate whether the statement is true or false
If excessive aggregate demand causes prices to rise, which of the following would be a correct fiscal-policy action?
A. An increase in government expenditures B. An increase in the money supply C. An increase in Social Security payments D. A tax increase
Economic engineering:
A. focuses exclusively on social factors that affect incentives. B. is a scientific approach to economics in contrast to the heuristic supply/demand model. C. is the process of designing markets and coordinating mechanisms to achieve a specific goal. D. simulates virtual economies on the computer and lets coordination mechanisms emerge.
When the production of one good spills benefits over to third parties, the government should consider all of the following EXCEPT
A) subsidizing the consumption of the good. B) subsidizing the production of the good. C) creating tax incentives to encourage more consumption. D) taxing the production or consumption of the good.