Use a figure to explain the potential effectiveness of fiscal policy to spur on the economy under a fixed exchange rate
What will be an ideal response?
With an aim toward increasing output, the government could use fiscal policy to shift the DD curve outward. The central bank will have to take steps to maintain a fixed exchange rate , among the options is buying foreign assets with money, to shift the AA schedule outward until the equilibrium at point 3 is reached.
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An increase in the reserve ratio
A) has an expansionary effect on the money supply. B) has a contractionary effect on the money supply. C) increases the money multiplier. D) will cause banks to make more loans.
The Lorenz curve measures the:
a. distribution of income. b. effectiveness of government transfer payments. c. extent to which family incomes are affected by welfare. d. all of these.
For a family with disposal income less than autonomous consumption
A. the APC is greater than 1. B. induced consumption is positive. C. the APS is very small but positive. D. in the long run credit cards are used to make up difference.
The required reserves of a bank equal its ________ the required reserve ratio
A) deposits divided by B) deposits multiplied by C) loans divided by D) loans multiplied by