Suppose output is $1000 billion, government purchases are $200 billion, desired consumption is $700 billion, and desired investment is $150 billion. Net foreign lending would be equal to
A) -$150 billion.
B) -$50 billion.
C) $50 billion.
D) $150 billion.
B
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According to both the equation of exchange and the quantity theory of money
A) an increase in the money supply will decrease real Gross Domestic Product (GDP). B) a decrease in the money supply will decrease the velocity of money. C) a decrease in the money supply will decrease the price level. D) an increase in the money supply will increase real Gross Domestic Product (GDP).
To maximize its profit, the monopoly with the TR and TC curves shown in the figure above will produce
A) 0 units of output. B) 5 units of output. C) 15 units of output. D) 20 units of output.
Everything else held constant, in the market for reserves, when the supply for federal funds intersects the reserve demand curve along the horizontal section of the demand curve, lowering the interest rate paid on excess reserves
A) increases the federal funds rate. B) lowers the federal funds rate. C) has no effect on the federal funds rate. D) has an indeterminate effect of the federal funds rate.
If the production of a particular good involves significant external costs, to force the externality to be internalized the government might:
a. impose a tax on production of the good in order to increase production. b. impose a tax on production of the good in order to decrease production. c. offer a subsidy for production of the good in order to increase production. d. offer a subsidy for production of the good in order to decrease production.