In the complete algebraic formulation of ISLM,
A) the government spending multiplier is greater than the tax mulitplier as long as b <1.
B) the government spending mulitplier is less than the tax multiplier as long as b<1.
C) monetary policy is always more powerful than fiscal policy.
D) fiscal policy is always more powerful than monetary policy.
A
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The Santa Fe Spark Plug Company supplies spark plugs to automotive parts dealers. An increase in the demand for its product led Santa Fe to hire 150 new workers
Santa Fe also plans to expand the capacity of its plant but this project will take 2 years to complete. Which of the following statements is true? A) The long run for Santa Fe is longer than 1 year. B) The wages and benefits paid to the new workers are implicit costs. C) In the short run Santa Fe's variable costs increase but its fixed costs decrease. D) The short run for Santa Fe is 1 year.
A consequence of a negative externality is that social costs __________ private costs, and the efficient level of output __________.
A. equal; does not require any type of government intervention B. are less than; requires the government to create a subsidy C. are greater than; requires the government to impose a tax D. are greater than; requires the government to create a subsidy E. are less than; requires the government to impose a tax
Which of the following is responsible for decision making regarding the purchase and sale of bonds by the Fed?
a. the chairman of the Board of Governors of the Federal Reserve System b. the Federal Open Market Operations Committee c. the U.S. Secretary of Treasury d. the president, with the advice and consent of the chairman of the Council of Economic Advisers.
Explain why the Fed making more discount loans to banks, or an open market purchase, or an increase in foreign exchange reserves all have the same effect on its balance sheet. What is that effect on the monetary base?
What will be an ideal response?