Which of the following helps explain the multiplier effect?
a) Banks only hold a fraction of their deposits on reserve.
b) Income is spent and re-spent in the circular flow model.
c) People buy a lot of luxury items.
d) Incomes tend to increase with inflation.
Ans: b) Income is spent and re-spent in the circular flow model.
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Which of the following could result in a recession?
A) a rise in the price of oil B) an increase in investment C) a tax cut D) an increase in the quantity of money E) an increase in government expenditures on goods and services
The corporation, as a form of business organization, fueled the positive trend toward federal regulation of business activities for all of the following reasons except
(a) Corporations were rapidly becoming more numerous than sole proprietorships and partnerships. (b) Corporations made possible or encouraged growth in the number of giant enterprises. (c) Corporations were adept at market manipulations, including price-fixing. (d) Corporations were able to take advantage of economies of scale which made possible business organizations whose affairs overlapped local or state jurisdictions, creating the need for federal control across state lines.
An open market purchase of government securities by the Fed will tend to result in which of the following, other things being equal?
a. increased bond prices b. an increase in real output c. decreased interest rates d. all of the above
Briefly and concisely define the following terms
a. voluntarism b. direct controls c. depletable resource