Why didn't the huge increase in the money supply that resulted from quantitative easing lead to increases in inflation?
A. Because quantitative easing targets nominal GDP growth rates, not inflation rates.
B. Because the federal government offset the inflationary pressure by drastically decreasing spending and raising taxes.
C. Because quantitative easing increased the monetary base, but not broader definitions of money like M1 and M2.
D. Because huge increases in the money supply generally lead to deflation, not inflation.
Ans: C. Because quantitative easing increased the monetary base, but not broader definitions of money like M1 and M2.
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The term "market" in economics refers to
A) a group of buyers and sellers of a product and the arrangement by which they come together to trade. B) a legal institution where exchange can take place. C) an organization which sells goods and services. D) a place where money changes hands.
The presence of adverse selection:
A. reduces the efficiency of markets. B. increases the efficiency of markets. C. does not affect the efficiency of markets. D. makes the buyer less efficient and the seller more efficient.
According to the Economic Freedom of the World measure, between 2000 and 2010 the economic freedom of the United States
a. declined and its rank fell from third to tenth during this period. b. increased, and the U.S. became the freest economy in the world during this decade. c. was largely unchanged and the U.S. remained the third freest economy in the world, behind only Hong Kong and Singapore. d. decreased, but the U.S. was still the freest economy in the world in 2010.
The long run outcome of the monopolistically competitive firm:
A. does not maximize profits. B. is not efficient. C. is the same as the short-run outcome. D. maximizes total surplus.