When a recession hits, we would expect the government to run a budget deficit by raising the level of its spending or by cutting taxes, or perhaps both. The Fed would be expected to:
a. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market.
b. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market.
c. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market.
d. increase the required reserve ratio, reduce the discount rate, and sell securities on the open market.
e. increase the required reserve ratio, increase the discount rate, and sell securities on the open market.
c
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If the money rate of interest is 12 percent and the real rate of interest 7 percent, the inflationary premium is
a. 5 percent. b. 7 percent. c. 12 percent. d. 19 percent.
Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130 . Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145 . What is the deadweight loss created by the tax?
Refer to the graph above. When output increases from Q 1 and the price level decreases from P 1, this change will:
a. Be caused by a shift in the aggregate supply curve from AS1 to AS2 b. Result in a movement along the aggregate demand curve from e3 to e1 c. Result in a movement along the aggregate demand curve from e1 to e2 d. Be caused by a shift in the aggregate supply curve from AS1 to AS3
A monopolist ________ if it chooses to sell fewer units of output.
A. can set its price wherever it desires B. cannot change the price C. must decrease the price D. can increase the price