If the Fed sells a T-bill to a commercial bank, how will this affect the money supply?
A. It will increase the money supply.
B. It will increase bank reserves.
C. It will decrease the money supply.
D. It will have no effect on the money supply.
Answer: C
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Which of the following statements has been proposed as a benefit of passive policy making?
A) When using passive policy making there is no tradeoff between price stability and unemployment. B) Passive policy making allows for making immediate changes in response to an anticipated change in economic performance. C) Passive policy making utilizes the rational expectations hypothesis. D) Passive policy making does not wait for the time lag between recognition of a problem and policy action before engaging in economic policies to stabilize the economy.
Place point B on the graph to indicate where the United States economy operated in 1943.
Standardization of financial instruments has occurred as a result of:
A. the law of demand. B. economies of scale. C. the law of supply. D. the rule of 70.
Comparing the simple Keynesian model with the IS-LM model, in the IS-LM model
a. the government spending multiplier is larger. b. the balanced budget multiplier is larger. c. the tax multiplier is smaller. d. there is no difference between any of the multipliers.Figure 7-2