In the short run, ________ determines output, and in the long run ________ determines output.
A. total spending; potential output
B. potential output; total spending
C. total spending; prices
D. potential output; prices
Answer: A
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If the possibility of a default increases because corporations begin to suffer losses, then the default risk on corporate bonds will ________, and the bonds' returns will become ________ uncertain, meaning that the expected return on these bonds will
decrease, everything else held constant. A) increase; less B) increase; more C) decrease; less D) decrease; more
If the required reserve ratio is equal to 10 percent, a single bank can increase its loans up to a maximum amount equal to
A) its excess reserves. B) 10 times its excess reserves. C) 10 percent of its excess reserves. D) its total reserves.
The natural rate of unemployment includes frictional, cyclical, and structural unemployment
a. True b. False Indicate whether the statement is true or false
If exports rise and imports fall, then
a. GDP will increase b. GDP will decrease c. GDP may remain unchanged d. net exports will fall e. transfers will rise