If the Fed raises the discount rate, what will be the effect on the money supply?
A. It will decrease the money supply.
B. It will increase the money supply.
C. No change in the money supply
D. Not enough data to give an answer
Answer: A
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What is meant by increasing returns to scale?
What will be an ideal response?
Refer to Figure 27-11. If government purchases increase by $100 billion and lead to an ultimate increase in aggregate demand as shown in the graph, the difference in real GDP between point A and point B will be
A) less than $100 billion. B) $100 billion. C) more than $100 billion. D) There is insufficient information given here to draw a conclusion.
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and net nonreserve international borrowing/lending balancein the context of the Three-Sector-Model? State your answer after the macroeconomic
system returns to complete equilibrium. a. The quantity of real loanable funds per time period remains the same and net nonreserve international borrowing/lending balance becomes more negative (or less positive). b. The quantity of real loanable funds per time period rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive). c. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative). d. The quantity of real loanable funds per time period and net nonreserve international borrowing/lending balanceremain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Adverse selection is
a. the tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior. b. an action taken by an uninformed party to induce an informed party to reveal information. c. the failure of majority voting to produce transitive preferences for society. d. the tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party.