The stock market boom of the 1920s occurred in part because the demand for stocks increased. The source of this demand increase originated from whom?
(a) Ordinary workers who experienced rising wages and now had incentive to invest in the stock market, thus driving up stock prices.
(b) The people in the upper income strata; they received a high percentage of the increase in realized income during the 1920s and invested much of it in the stock market.
(c) Farmers who, finding agriculture increasingly unprofitable, began investing in the stock market rather than in farm land and equipment.
(d) Foreign investors who were optimistic about America's future and accordingly invested in American stocks.
(b)
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During World War II, whenever interest rates would rise and the price of bonds would begin to fall, the Fed would
A) lower reserve requirements. B) raise reserve requirements. C) make open market purchases of government securities. D) make open market sales of government securities.
A fall in the domestic interest rate leads to capital outflows, which make the exchange rate depreciate. The monetary expansion of the mid-1990s was expected to lead to a currency appreciation.
Answer the following statement true (T) or false (F)
Which of the following is an example of the law of demand?
A) A decrease in the price of milk is followed by an increase in milk purchases.
B) A decrease in the price of milk is followed by a decrease in milk purchases.
C) An increase in the price of milk has no effect on the amount of milk purchased.
D) The amount of milk purchased increases when the price is constant.
The consumer price index for Planet Econ consists of only two items: books and hamburgers. In 2015, the base year, the typical consumer purchased 10 books for $25 each and 25 hamburgers for $2 each. In 2017, the typical consumer purchased 15 books for $30 each and 30 hamburgers for $3 each. The consumer price index for 2017 on Planet Econ equals:
A. 1.00 B. 1.25 C. 1.45 D. 1.15