The tool most often used by the Fed to control the money supply is
a. changing reserve requirements.
b. open market operations.
c. buying and selling of equities.
d. altering the discount rate.
b
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Starting from equilibrium and using the ISLM framework, a decrease in investment leads to
A) lower interest rates and higher income. B) higher interest rates and higher income. C) lower interest rates and lower income. D) higher interest rates and lower income.
The change in consumption divided by a change in income is called the:
a. consumption function. b. marginal propensity to consume. c. marginal propensity to spend. d. spending function. e. changing propensity to consume.
During the second half of 2008 the monetary base was growing far more rapidly than the money supply because
a. banks were using most of their excess reserves to extend loans and make investments. b. the Fed quickly shifted from expansionary monetary policy to restrictive monetary policy. c. banks were using their excess reserves to make foreign investments. d. banks were maintaining huge excess reserves.
Which statement is the most accurate?
A. The monopolist produces at the minimum point of its average total cost curve. B. The monopolist breaks even in the long run. C. The monopolist faces the entire industry demand curve. D. Nearly all monopolists are very large firms.