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
d
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Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product, to answer the next question.
With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be
A. w and y?w. B. w and z?w. C. x and z?x. D. v and z?v.
Economists agree that the multiplier effect on real output is close to zero when: a. inflation is very low
b. the economy is at or near full employment. c. the national debt is relatively small. d. "shovel-ready" projects exist.
Suppose aggregate demand is too high to bring about the Natural Real GDP level. A Keynesian policy prescription would call for a(n) _____________________ to close this inflationary gap
A) increase in government spending B) decrease in government spending C) increase in taxes D) decrease in taxes E) b or c
Suppose an economy with two goods (candy and desk) and two identical agents that is in a competitive equilibrium. The marginal cost of a piece of candy is given by MCc = 4Qc and the marginal cost of a desk is MCd = 2 + Qd. The current production level of candy (Qc) is 4 pieces and of desks (Qd) is 30. What can be said about the marginal utility of candy (MUc) and the Marginal utility of desks
(MUd)? A) 3MUc = MUd B) MUc = 0.5MUd C) MUc = MUd = 4 D) MUc = 2MUd