Which of the following monetary policies reduces aggregate demand and output?
A. A cut in the required reserve ratio
B. An open market purchase of government securities
C. An increase in the discount rate
D. A cut in the federal funds rate
Answer: C
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Which of the following statements is true?
A. Leverage increases expected return and increases risk. B. Leverage increases expected return and reduces risk. C. Leverage decreases expected return and increases risk. D. Leverage decreases expected return but has no effect on risk.
The objective of diversification is to reduce risk. How does a person diversify a stock portfolio? How is risk measured?
Explain why the portion of the national debt owed to foreigners is a serious matter, whereas the portion owed to U.S. citizens is of less concern. Why does the U.S. national debt pose less of a problem than the debts of Greece in 2010?
What will be an ideal response?
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2. B. P2 and Y3. C. P3 and Y1. D. P2 and Y2.