To reduce the federal funds rate, the Fed can ________.
A. increase the discount rate
B. sell government bonds to commercial banks
C. buy government bonds from the public
D. increase the reserve ratio
Answer: C
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Suppose that the production function for the economy is Y = AK0.5L0.5. If the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 3, real GDP is
A) $60,000. B) $75,000. C) $150,000. D) $300,000.
Equilibrium
What will be an ideal response?
Matilda just graduated from college. In order to devote all her efforts to college, she didn't hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate
a. increases, and the labor-force participation rate decreases. b. and the labor-force participation rate both increase. c. increases, and the labor-force participation rate is unaffected. d. and the labor-force participation rate are both unaffected.
Which of the following is consistent with the classical theory of growth?
A) permanent increases in real wages B) permanent growth in productivity C) rapid population growth in poor countries D) permanent increases in living standards