(Consider This) During and immediately following the severe recession of 2007-2009, on the consolidated balance sheet of the 12 Federal Reserve Banks:
A. commercial bank reserves grew significantly because the Fed increased the required
reserve ratio.
B. liabilities fell significantly as commercial banks drained reserve accounts to meet their own
deposit liabilities.
C. assets fell significantly as a result of heavy withdrawals from commercial banks.
D. assets grew significantly from Fed purchases of securities from financial institutions.
D. assets grew significantly from Fed purchases of securities from financial institutions.
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A Pigouvian subsidy
a. cannot achieve an efficient outcome b. is a per-unit payment on a good that is set equal to the marginal external benefit at QE c. achieves efficiency as long as it is set equal to the MEC at the competitive output level d. lowers the MPB vertically by the amount of the subsidy
Under the adaptive expectations hypothesis, which of the following is the most likely long-run effect of a move to a more expansionary monetary policy?
a. higher prices and no change in real output b. higher prices and expansion in real output c. no change in prices but an expansion in real output d. no change in either prices or real output
What are the proper monetary and fiscal responses to a recession under the activist view and the nonactivist view?
Suppose an increase in supply lowers the price from $10 to $8 and increases and increases the quantity demanded from 100 units to 130 units. Using the midpoint method, the elasticity of demand equals what
A) 1.17. B) 0.85. C) 0.26. D) 1.56. E) None of the above answers is correct.