When the economy is at full employment and inflation is present, the government could create a surplus budget by cutting its own spending and raising taxes. The Fed would be expected to:
a. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market.
b. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market.
c. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market.
d. increase the required reserve ratio, reduce the discount rate, and sell securities on the open market.
e. increase the required reserve ratio, increase the discount rate, and sell securities on the open market.
e
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Which of the following would be associated with the early phase of the product cycle?
A) Large amounts of production in low-income, developing countries B) A standardized product with an assembly-line style production process C) Sophisticated marketing and customer feedback mechanisms D) More consumption in low-income, developing countries
Explain how does a rise in real income affect aggregate demand?
What will be an ideal response?
Refer to the above figure. The firm is currently producing at Q2. The firm should
A) reduce production. B) leave production as it is. C) increase production. D) shut down.
Where would a country such as Japan get U.S. dollars in order to engage in managed float?
a. It would print them. b. It would use its reserve of dollars. c. It would sell yen on the open market in exchange for U.S. dollars. d. Since Japan's currency is the yen, it would not be able to obtain U.S. dollars. e. It would borrow U.S. dollars form the U.S.