According to the rational-expectation theory, an unanticipated increase in money supply increases both output and prices.
Answer the following statement true (T) or false (F)
True
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A reserve requirement set by the Federal Reserve is the:
A. minimum amount of currency banks must hold in their vaults. B. maximum amount of currency banks are allowed to hold in their vaults. C. minimum ratio of reserves to bank deposits that commercial banks are allowed to maintain. D. maximum ratio of reserves to bank deposits that commercial banks are allowed to maintain.
A negative externality exists and government wants to impose a tax in order to bring about an efficient outcome. To accomplish its objective, government must set the tax equal to marginal
A. private cost. B. social benefit. C. external cost. D. social cost. E. external benefit.
The actual government budget surplus ________ be used to determine the effectiveness of discretionary fiscal policy actions because ________
A) cannot; it excludes non-discretionary spending changes B) can; it includes non-discretionary spending changes C) cannot; it includes non-discretionary spending changes D) can; it excludes automatic stabilization expenditures
A price floor keeps a price:
a. from rising above a certain level. b. from decreasing below a certain level. c. at a stabilized point. d. from increasing or decreasing.