Suppose a pickpocket steals your $20 bill and spends all of it on pizza and beer. What happens to GDP?
A) GDP increases by twenty dollars.
B) GDP decreases by twenty dollars.
C) Because the positive balances out the negative, GDP remains unchanged.
D) GDP decreases because somebody has clearly been made worse off.
A
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The balance of payments is in equilibrium when
A) the sum of the current account balance and capital account balance is zero. B) net exports are zero. C) net foreign investment is zero. D) real foreign investment is equal to net exports.
The Fed's open market operations normally involve only the purchase of government securities, particularly those that are short-term. However, during the crisis, the Fed started new programs to purchase
A) mortgage-backed securities and long-term Treasuries. B) mortgage-backed securities and Treasury bills. C) commercial papers and short-term Treasuries. D) Treasury bills and Treasury notes.
Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e). Assume M = 4000, P = 2.0, ?e = .03, and Y = 5000. The real interest rate that clears the asset market is
A) 3%. B) 6%. C) 11%. D) 14%.
When family incomes are ranked from lowest to highest, the middle income is known as the
a. median income b. mean income c. means-tested income d. official poverty level e. transfer income