Refer to Scenario 1. Once the full impact of the Fed's open market purchase and Sheila's deposit worked its way through the banking system, what is the maximum change on the money supply as a result of these two events?
A) Money supply falls by $100,000.
B) Money supply falls by $1,000,000.
C) Money supply rises by $10,000.
D) Money supply rises by $1,000,000.
Ans: D) Money supply rises by $1,000,000.
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Based on the figure above, in which quarter or quarters did an expansion occur?
A) in 2014, 2nd quarter B) in 2013, 2nd quarter C) between 2013, 2nd quarter to 2014, 2nd quarter D) between 2012, 2nd quarter to 2013, 2nd quarter and also between 2014, 2nd quarter to the end of the figure E) There are no expansions illustrated in the figure.
Consumers in Beachland consume only two goods, sodas and DVDs. If they spend $10 on sodas and $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9?
A) 9 sodas and 1 DVD B) 1 soda and 9 DVDs C) 10 sodas and 9 DVDs D) 10 sodas and 10 DVDs E) It is impossible to determine the market basket without information on the quantity of at least one of the two goods consumed.
When the Fed alters the types of assets it owns, it is engaging in
A) international balance management. B) forward guidance. C) quantitative easing. D) changing the discount rate.
In the figure above, if the minimum wage is $8 per hour, then
A) resources used in job-search activity increase compared to the situation before the minimum wage. B) it is legal to hire workers for a wage below the minimum wage because otherwise unemployment would result. C) the deadweight loss is minimized. D) Both answers A and B are correct. E) Both answers B and C are correct.