The liquidity trap refers to the situation where:
A. the Fed adds excess reserves to the banking system, but it has minimal positive effect on
lending, investment, or aggregate demand.
B. excessive consumer debt limits the growth in consumer spending necessary to bring the
economy out of recession.
C. the public debt is so large that federal borrowing drives up interest rates and discourages
private sector spending.
D. a financial crisis causes a run on banks and the elimination of billions in excess reserves.
A. the Fed adds excess reserves to the banking system, but it has minimal positive effect on
lending, investment, or aggregate demand.
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Most of the state and local government employees are in what area?
A. Education B. Highways C. Health care D. Administration
In a market with only one firm (a pure monopoly), the Herfindahl-Hirschman Index (HHI) would equal 10,000.
Answer the following statement true (T) or false (F)
A supply curve that is vertical
A) is perfectly inelastic. B) is impossible. C) has an elasticity equal to 1. D) is perfectly elastic.
Labor hoarding occurs when
A) firms keep good workers so other firms can't hire them. B) the unemployment rate exceeds the natural rate of unemployment. C) involuntary unemployment exceeds voluntary unemployment. D) because of hiring and firing costs, firms retain workers in a recession that they would otherwise lay off.