Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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When the Fed decreases the required reserve ratio, then the:
a. ability of banks to make loans is restricted. b. ability of banks to make loans is enhanced. c. ability of banks to make loans is unaffected. d. interest rate that banks pay to the Fed to borrow money is reduced. e. interest rate that banks pay other banks to borrow money is decreased.
Which one of the following reduces inequities resulting from the public debt?
a. regressive tax system b. bond purchases by the Federal Reserve c. 30-year Treasury securities d. progressive income tax system e. private savings
Refer to Figure 7.1. What is the average product of 20 workers?
A. 1.1 units of output
B. 22 units of output
C. 2 units of output
D. 8 units of output
In the GDP accounts production equals
a. income. b. income + saving. c. income - government expenditures. d. income - imports.