A federal system consists of one level of government to provide public goods and services.
A. True
B. False
C. Uncertain
B. False
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
From the economist's point of view
A) wants and needs are exactly the same. B) a want is a lifesaving necessity. C) needs are objectively undefinable. D) we all have wants but only very poor people have needs.
According to the Taylor rule, if inflation has risen by 6 percentage points above its target of 2 percent, the Fed should:
A. grow the money supply at a rate of 6 percent per year. B. raise the real federal funds rate by 6 percentage points. C. raise the real federal funds rate by 3 percentage points. D. raise the real federal funds rate by 12 percentage points.
Assume the legal reserve ratio is 25 percent and the Fourth National Bank borrows $10,000 from the Federal Reserve Bank in its district. As a result:
A. commercial bank reserves are increased by $10,000. B. the supply of money automatically declines by $7,500. C. commercial bank reserves are increased by $7,500. D. the supply of money is automatically increased by $10,000.