An increase in government spending
What will be an ideal response?
has a similar effect to an increase in private fixed investment. It shifts the AD line upward, as government spending rises. This increases the equilibrium levels of income and output. The increase in Y is larger than that of G because of the multiplier effect, which occurs due to the induced consumption that occurs as the economy expands along the AD line.
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An asset becomes more liquid and hence more money-like
A) as its value relative to other goods approaches zero. B) as its value relative to other goods becomes more uncertain and unpredictable. C) as the cost of exchanging it for other goods approaches zero. D) when it is demanded for its own intrinsic value.
Commodity speculators persuade people to start economizing in their consumption of a good as soon as the speculators foresee an increased future scarcity by causing
A) futures prices, expected future prices, and current prices to fall. B) futures prices, expected future prices, and current prices to rise. C) futures prices and expected future prices to fall and current prices to rise. D) futures prices to rise, expected future prices to fall, and current prices to rise. E) futures prices and expected future prices to rise and current prices to fall.
New social regulations usual are created as barriers to entry
Indicate whether the statement is true or false
Answer the following statements true (T) or false (F)
1. Share draft accounts at credit unions are a type of transaction account. 2. Reserve requirements on non personal time deposits cannot exceed 9 percent. 3. It is possible for the economy to still experience an increase in the money supply when the Fed increases the reserve requirement. 4. Interest rate ceilings were phased out by the Depository Institutions Deregulation and Monetary Control Act of 1980. 5. The Federal Reserve today no longer has control over stock market margins requirements.