The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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Government revenue from printing money is referred to as:
A) menu costs. B) seigniorage. C) shoeleather costs. D) excise tax
Suppose that consumers expect that the price of a product will increase in the future. The result is that
A) the current supply of the product decreases. B) the current demand for the product decreases. C) the current demand for the product increases. D) the current supply of the product increases.
If a corporate bond with face value of $8,000 has an interest rate of 4 percent paid once a year for a term of 30 years, what is the size of the coupon payment?
A) $320 B) $2,000 C) $8,000 D) $9,600
If the Fed increases the required reserve ratio at a time when banks are holding excess reserves, then: a. the Fed's aim is to increase the money supply
b. banks are likely to lend out more money than they would if the Fed left the reserve ratio alone. c. banks are likely to earn higher profits than they would. d. the money supply will not increase as much as it would if the Fed left the reserve ratio alone. e. the Fed's aim is to conduct open market operations without changing the money supply.