Suppose you withdraw $1,000 from your savings account and put it under your mattress. Briefly explain how this will affect M1 and M2
What will be an ideal response?
M2 will not change and M1 will rise by $1,000. When under your mattress, the $1,000 would be counted as currency. Going from a savings account to currency would raise M1, but both are part of M2, so M2 would not change.
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Refer to Figure 12-10. Total revenue at the profit-maximizing level of output is
A) $1,200. B) $2,500. C) $4,800. D) $6,000.
In the Solow growth model, if the level of investment is less than depreciation at the initial capital-labor ratio , then ?k is ________ and the capital-labor ratio ________ toward the steady-state capital-labor ratio
A) greater than zero; increases B) greater than zero; decreases C) less than zero; increases D) less than zero; decreases
The credit spread refers to ________
A) the extent to which financial instruments are distributed among households at different income levels in a given society B) the difference between the London Inter-Bank Offered Rate (LIBOR) and the fed funds rate C) the price elasticity of household debt D) the interest-rate differential between risky bonds and U.S. Treasury bonds
Unemployment caused by people voluntarily quitting work in order to seek more attractive employment is
a. the natural rate of unemployment b. not considered part of the unemployment c. cyclical unemployment d. frictional unemployment e. structural unemployment