Specialization and exchange
a. generally leads to increased production of some goods at the cost of decreased production of other goods
b. causes the production possibilities frontier to shift inward
c. increases total production of every good only if the total amount of resources also increases
d. alters the allocation of production among individuals or nations, but does not alter total production levels
e. allows greater total production of every good without an increase in the total amount of resources
E
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When the reserve requirement is increased, the excess reserves of member banks are ________.
A. reduced, but the multiple by which the commercial banking system can lend is unaffected B. reduced and the multiple by which the commercial banking system can lend is reduced C. reduced and the multiple by which the commercial banking system can lend is increased D. increased and the multiple by which the commercial banking system can lend is increased
A person is preparing for a long automobile trip and cashes in a certificate of deposit for cash in case of emergencies along the way. This is an example of the
A) transactions demand for money. B) asset demand for money. C) precautionary demand for money. D) wealth demand for money.
An open market purchase of bonds by the central bank will cause which of the following when a liquidity trap situation exists?
A) The interest rate will decrease. B) The interest rate will not change. C) Output will increase. D) The money supply, M, will not change. E) none of the above
What is the primary reason that changes in total spending lead to cyclical changes in output and employment?
A. Government is unable to respond by changing the amount of money in circulation. B. Changes in total spending cause supply shocks that cause cyclical variation. C. Prices are sticky in the short run. D. Prices are flexible in the long run.