When a recession occurs, we would expect the government to run a budget deficit by raising the level of its spending or by cutting taxes, or perhaps both. The Fed would be expected to
a. reduce the legal reserve requirement, increase the discount rate, and buy securities on the open market
b. reduce the legal reserve requirement, reduce the discount rate, and sell securities on the open market
c. reduce the legal reserve requirement, reduce the discount rate, and buy securities on the open market
d. increase the legal reserve requirement, reduce the discount rate, and sell securities on the open market
e. increase the legal reserve requirement, increase the discount rate, and sell securities on the open market
C
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According to economist Jean-Pierre Dube, a 10 percent increase in the price of a twelve-pack of Mountain Dew will lead to a ______ percent increase in the sales of twelve-packs of Pepsi.
a. 10 b. 7.7 c. –5 d. –8.2
Which of the following could not serve as commodity money?
a. diamond b. gold c. paper d. fur e. silver
When governments rapidly increase the supply of money, the usual result is
a. deflation. b. low inflation. c. hyperinflation. d. increasing long-term investment.
A budget deficit will be most inflationary if the aggregate
a. demand curve is very steep. b. demand curve is very flat. c. supply curve is very flat. d. supply curve is very steep.