The idea that new policies change the economic rules and affect economic behavior, so that no one can safely assume that historical relationships between variables will hold when policies change, is known as
A) Okun's Law.
B) Say's Law.
C) the equation of exchange.
D) the Lucas critique.
D
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Which of the following is TRUE regarding the long run for a firm in monopolistic competition?
A) P = MC = ATC B) P = MC = MR C) ATC = MC = MR D) P = ATC
An increase in the money supply leads to a(n):
a. decline in interest rates, an increase in investment, and an increase in aggregate demand. b. decline in interest rates, a decrease in investment, and an increase in aggregate demand. c. decline in interest rates, an increase in investment, and a decline in aggregate demand. d. increase in interest rates, an increase in investment, and an increase in aggregate demand. e. decline in interest rates, a decline in investment, and a decline in aggregate demand.
The banking system currently holds $20 billion in required reserves and zero excess reserves. The Fed lowers the required reserve ratio from 15 percent to 12.5 percent. Assuming that there are no cash leakages, the resulting change in checkable deposits (or the money supply) is approximately
A) $2.7 billion. B) $1.5 billion. C) $2.0 billion. D) $12.5 billion. E) $26.6 billion.
What happens when consumers in the economy start to spend less, perhaps because they become worried about the future?
A. Savings rises, causing increases in investment that boost GDP. B. The demand for dollars falls, causing the exchange rate to fall and exports to rise. C. Prices fall, causing consumers to start spending again. D. The incomes of other people fall, causing those people to spend less as well.