Of the three big questions, what, how, and for whom, which of the fol-lowing is an example of a how question?
A. Why do doctors and lawyers earn high incomes?
B. Why don't we produce more small cars and fewer gas guzzlers?
C. Why do we use machines rather than migrant workers to pick grapes?
D. Why do college football coaches earn more than professors?
C Answer C describes how grapes are picked.
4 Which of the following is not a key idea in the economic way of thinking?
A. People make rational choices by comparing costs and benefits.
B. Poor people are discriminated against and should be treated more fairly.
C. A rational choice is made at the margin.
D. Choices respond to incentives.
B Answer B is not part of description of the economic way of thinking on page 8.
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Which of the following is NOT included in the M2 definition of money?
A) currency held by banks B) money market mutual fund balances C) savings deposits D) checkable deposits
Which of the following statements is TRUE?
A) An increase in the price of gasoline will decrease the demand for gasoline. B) An increase in the price of gasoline will increase the quantity demanded of gasoline. C) An increase in the price of gasoline will increase the supply of gasoline. D) An increase in the price of gasoline will increase the quantity supplied of gasoline.
Refer to Table 26-6. Suppose the table above illustrates the values of real and potential GDP and the price level if the Fed does not vote to change their current policy to be more contractionary or expansionary
If the Fed wants to keep real GDP at its potential level in 2017, should the Fed use a contractionary or expansionary policy? Should it raise or lower its interest rate target? How should it conduct open market operations to achieve its goal?
If the reserve requirement for a bank is $200,000 for a deposit of $1 million, then the money multiplier is:
a. 1.25 b. 2.0 c. 5 d. 20