A key assumption of most economic analysis is that people act rationally, meaning they respond to incentives.
Answer the following statement true (T) or false (F)
True
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In the simple deposit expansion model, if the required reserve ratio is 20 percent and the Fed increases reserves by $100, checkable deposits can potentially expand by
A) $100. B) $250. C) $500. D) $1,000.
A jobless recovery occurs when
A) no jobs are created in an economy after a recession ends. B) employment continues to fall at the beginning of a recovery. C) only low-quality jobs are created in a recovery. D) most of the new jobs created in a recovery are overseas.
Which type of U.S. government security is a kind of zero-coupon security?
A) Federal funds note B) U.S. Treasury note C) U.S. Treasury bill D) U.S. Treasury bond
The Fed's quick response to the threat to the economy after September 11, 2001, makes a strong case for
a. a rules-based monetary policy regime. b. a discretionary-based monetary policy regime. c. the superiority of fiscal policy. d. the dominant role of Congress in activist policy.