The Fed's purchase of U.S. government securities constitutes a(n):
a. contractionary policy because it lowers the amount of total reserves in the banking system.
b. contractionary policy because it lowers the amount of excess reserves in the banking system.
c. expansionary policy because it raises the amount of total reserves in the banking system.
d. expansionary policy because it lowers the amount of total reserves in the banking system.
e. expansionary policy because it raises the amount of required reserves in the banking system.
c
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Explain the reasons why the AD curve slopes downward
What will be an ideal response?
Economic efficiency is a market outcome in which the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized
Indicate whether the statement is true or false
The largest portion of any nation's current account is typically
A) imports and exports. B) gold sales. C) the sale of U.S. assets. D) SDRs.