When the money supply is expanding and prices rise rapidly, economic growth
a. is slowed by the resulting unpredictability of the future level of prices.
b. is enhanced as economic activity grows more rapidly.
c. is enhanced because profits are higher so that capital investment is greater.
d. is enhanced because existing debt is reduced in value, so people are willing to buy more goods.
A
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A currency drain occurs when the
A) Fed increases the required reserve ratio. B) Fed sells U.S. government securities. C) non-bank public increases its holdings of currency outside the banking system. D) banks reduce the number of loans they create with their excess reserves. E) Fed buys U.S. government securities.
Suppose an agent must pay the full marginal cost for an item but splits the marginal revenue with the principal. As a result,
A) joint profit is maximized. B) joint profit is not maximized. C) the agent will not enter into such a contract. D) the agent wishes to sell as many items as he can.
Suppose a person's utility for leisure (L) and consumption (Y) can be expressed as U = Y + L0.5. Assuming a wage rate of $10 per hour, show what happens to the person's labor supply curve when the person wins a lottery prize of $100 per day
What will be an ideal response?
Nearly half of the publicly held U.S. federal debt are held by foreigners
a. True b. False Indicate whether the statement is true or false