The budget set defines the combinations of good X and Y that:
A. maximize the supplier's profit.
B. maximize the consumer's utility.
C. are desirable to the consumer.
D. are affordable to the consumer.
Answer: D
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Assume the commercial banking system has checkable deposits of $20 billion and excess reserves of $2 billion when the reserve requirement is 25%. If the reserve requirement is then lowered to 20%, we can conclude that the ________.
A. banking system now has excess reserves of $3 billion B. Fed has decided that money supply needed to be reduced C. monetary multiplier has decreased D. maximum money-creating potential of the banking system has been increased by $7 billion
Use the aggregate expenditures model and assume an economy is in equilibrium at $6 trillion which is $500 billion above full-employment GDP. If the marginal propensity to consume (MPC) is 0.75, full-employment GDP can be reached if government spending:
a. decreases by $75 billion. b. decreases by $125 billion. c. decreases by $500 billion. d. is held constant.
At the end of the day, Gracia's Pizza looks into the cash register to count up the day's total revenue. Another way of calculating its total revenue would be to find
a. price × average revenue b. price × marginal revenue c. price × quantity d. marginal revenue × average revenue e. marginal revenue × marginal cost
If a bank lends funds in the form of cash, then:
a. M2 stays the same, but M1 rises. b. M1 and M2 fall. c. M1 and M2 do not change. d. M2 rises, and M1 falls. e. M1 and M2 rise.