The Fed cannot predict the effects of open-market operations with perfect accuracy because of
A. changes in people’s desires for cash.
B. foreigners desire to hold U.S. dollars.
C. banks’ desires to hold excess reserves.
D. all of the above are correct.
Answer: D
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
According to the rule of 70, if you earn an interest rate of 3.5 percent, your savings will double about every 20 years
a. True b. False Indicate whether the statement is true or false
According to the law of demand, when the price of a good falls
A. the quantity of the good supplied will decrease to meet the decreased demand. B. the quantity of the good supplied will increase to meet the increased demand. C. the quantity of the good demanded tends to fall. D. the quantity of the good demanded tends to rise.
Refer to the table. If the full-employment real GDP is $70, the:
A. inflationary expenditure gap is $30.
B. recessionary and inflationary expenditure gaps are both $0.
C. inflationary expenditure gap is $10.
D. recessionary expenditure gap is $10.