Suppose that many people who earn a living designing apps decide they can make more money selling honey and switch occupations. How will this change affect the number of apps supplied by producers?
A. supply decreases
B. supply does not change
C. supply increases
Ans: A. supply decreases
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A $50 billion increase in both government spending and taxes will
A) increase GDP by less than $50 billion. B) not change the level of GDP. C) increase GDP by $50 billion. D) increase GDP by more than $50 billion.
Distinguish the current account from the financial account
What will be an ideal response?
The era of bank panics in the United States was effectively ended by
A) establishing the Fed as lender of last resort. B) implementing the gold standard. C) abandoning the gold standard. D) introducing deposit insurance.
Imagine the inflation rate begins to rise rapidly, the FOMC meets and it is believed that the target interest rate needed to stem the inflation could easily exceed 20 percent. Many members of the committee believe the Fed cannot announce this high of a target for political reasons. Discuss what the FOMC could do in terms of targets and what change occurred in 2002 that is going to make their job a bit more difficult.
What will be an ideal response?