If the Fed increases its open market purchases of government securities, it exerts a downward pressure on the interest rate. Such a phenomenon is usually referred to as the ___________________ effect
A) income
B) substitution
C) open market
D) liquidity
E) expectations
D
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Why has the Federal Reserve chairman often been called the second most important person in terms of affecting the economy?
A) The Fed chairman has veto power over all federal spending. B) The Fed is in control of monetary policy. C) The Fed chairman draws the second highest salary of any official of the federal government. D) The Fed has regulatory power over all financial markets.
Compared to a negative income tax, the federal personal income tax is thought of as a way to promote greater equality. Why?
What will be an ideal response?
In the classical model, fiscal policy has no demand-side effects on output or employment
a. True b. False
The expansionary phase of the business cycle is characterized by
a. decreasing real output and increasing unemployment. b. decreasing real output and declining unemployment. c. increasing real output and increasing unemployment. d. increasing real output and declining unemployment.