Which of the following best characterizes the intersection of Y* and AE*?
a. the point toward which the economy moves
b. the point away from which the economy moves
c. the hypothetical but unattainable point of equilibrium
d. the point at which, once reached, the economy remains unchanged
a. the point toward which the economy moves
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Answer the next question on the basis of the following consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is 20%. All figures are in billions.Assets (billions of dollars)Liabilities & Net Worth (billions of dollars)Reserves$200Checkable deposits$1000Securities300Stock shares400Loans500 Property400 Suppose the Fed wants to increase the money supply by $1,000 billion to drive down interest rates and stimulate the economy. To accomplish this, it could lower the reserve requirement from 20% to ________.
A. 15% B. 10% C. 14% D. 12%
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The real risk-free interest rate rises and real GDP falls. b. The real risk-free interest rate falls and real GDP rises. c. The real risk-free interest rate rises and real GDP remains the same. d. The real risk-free interest rate and real GDP remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The effect of an import quota is
A. to shift the supply curve up by the amount of the quota. B. to make the supply curve horizontal at the amount of the quota. C. to lead to a decrease in demand. D. to make the supply curve vertical at the amount of the quota.
The development of the polio vaccine would be considered a(n) _____________________ to society.
Fill in the blank(s) with the appropriate word(s).