In an open-market sale the Federal Reserve ________ government bonds and the supply of bank reserves ________.
A. buys; increases
B. sells; decreases
C. sells; increases
D. buys; decreases
Answer: B
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Which of the following reduces the magnitude of the expenditure multiplier?
A) higher marginal tax rates B) decrease in saving C) decrease in the marginal propensity to consume D) decrease in imports E) decrease in government purchases of goods and services
Analyze the short-run and long-run effects of an unanticipated decrease in the money supply in the misperceptions model. Tell what happens to output, the price level, and the expected price level in both the short run and long run
What will be an ideal response?
In the United States the differential between union and non-union wages
A) does not exist. B) currently averages about 50-60 percent. C) has been narrowing. D) tends to fall during a recession because union members typically have shorter-term contracts than do nonunion employees.
If the government decreases the income tax rate, then:
A. GDP will decrease. B. aggregate demand will shift left. C. aggregate demand will shift right. D. aggregate supply curve with shift to the right.