Assume the demand for money curve is stationary and the Fed increases the money supply. The result is that people:
a. increase the supply of bonds, thus driving up the interest rate.
b. increase the supply of bonds, thus driving down the interest rate.
c. increase the demand for bonds, thus driving up the interest rate.
d. increase the demand for bonds, thus driving down the interest rate.
d
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The one organization that has the power to change the total amount of reserves in the banking system is the
A) Executive Branch of the Federal Government. B) U.S. Treasury. C) Federal Reserve System. D) Congress.
Instead of studying for his calculus exam, Dicky Cribsheets decides to cheat. In the economic way of thinking, Dicky's decision is
A) inefficient and wrong. B) inefficient and desirable. C) efficient and desirable D) not necessarily any of the above.
Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called
a. consumer surplus. b. producer surplus. c. marginal cost. d. triangular arbitrage.
Describe the sequence of events that real business cycle theorists would use to explain how an adverse supply shock would impact the economy. Use your answer to explain why it is easy to confuse cause and effect between changes originating on the supply side and those that begin on the demand side