The Fed has recently paid interest on the required and excess reserves that banks hold.
Answer the following statement true (T) or false (F)
True
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If the demand for money is Md = 100 +.25Y – 100r and then the increase in money demand rises by 100, the LM curve shifts to the
a. right by 400. b. right by 100. c. left by 200. d. left by 400. e. none of the above.
A good is classified as inferior if
a. consumers buy less when the price rises. b. consumers buy less when income rises. c. consumers buy less when the price falls. d. consumers buy more when income rises.
An example of contractionary fiscal policy would be
a. cutting taxes b. decreasing government spending c. increasing production of consumer goods d. expanding the governments role in regulating private industry
Some economists believe that the economy benefits from firms having market power. Which of the following is an argument that has been made to support this position?
A) Large firms are better able than small firms to spend funds on research and development required to develop new products. B) Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms. C) Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States. D) Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries.