When a bank has excess reserves
A) it can create money.
B) it can make loans.
C) it has too many loans.
D) Both answers A and B are correct.
D
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The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
a. increase exports b. reduce the competitive pressure on prices c. lower the value of the currency in the country with the higher inflation rate d. increase foreign aid e. increase the speculative demand for the currency
The larger the fraction of an investment financed by borrowing, the greater the potential for both profits and losses from that investment
a. True b. False Indicate whether the statement is true or false
Which of the following policies would a Keynesian expect to produce the largest increase in income?
A. A reduction in government spending of $100 billion B. An increase in transfer payments of $100 billion C. An increase in government spending of $100 billion D. A tax cut of $100 billion
The Fed hopes to impact short-run inflation and output by altering:
A. aggregate supply. B. aggregate demand. C. fiscal policy. D. the production function.