Suppose the Federal Reserve decides to increase the proportion of deposits that banks must hold from 1% to 3%. Which monetary policy tool is it using?
a) Reserve requirements
b) Discount rate
c) Open market operations
d) Infrastructure spending
Ans: a) Reserve requirements
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The actual incidence (or burden) of a tax refers to
a. the governmental agency responsible for collecting the tax. b. who actually bears the burden of a tax once changes in market prices are taken into account. c. the degree of progressiveness in the rate structure of the tax. d. who the tax is legally or statutorily imposed on.
On which point on the graph above should the economy operate if it wants to maximize its future production possibilities?
a. A b. B c. C d. D
Bucky and Satchel are offered identical jobs, each paying $80,000 per year. According to behavioral economics:
A. they should feel equally good about the job offer. B. how each will feel about the job offer will depend on their current positions and incomes. C. if Bucky's current income is $60,000 per year, and Satchel's is $70,000 per year, we would expect Bucky to receive twice as much additional utility from taking the job as Satchel would. D. if the jobs will not change their income, they are more likely to switch jobs than remain with the status quo.
If the price elasticity of supply is 1, supply is:
A. unaffected by price changes. B. inelastic. C. unit elastic. D. elastic.