An increase in government purchases, ceteris paribus, will
A) increase public saving. B) reduce investment.
C) increase the supply of loanable funds. D) reduce real GDP.
B
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Prospect theory can explain why
A) people tend to gamble on long odds with small expected utility. B) people tend to sell their losing stocks and keep their winning stocks. C) people should only sell their losing stocks. D) people should never play the lottery.
Answer the following statements true (T) or false (F)
1. The primary function of the Fed’s Board of Governors is to formulate U.S. monetary policy. 2. The first attempt at centralized banking in the United States was the Federal Reserve System. 3. A major weakness of the National Banking System was the perverse elasticity of the money supply. 4. The Federal Reserve System was established by the National Banking Act of 1864. 5. Instead of having one central bank, the Federal Reserve in effect has twelve district banks, each with some amount of autonomy.
During the economic crisis of 2008, the Fed acquired the authority to
a. pay interest to commercial banks on their reserves. b. determine the size of the budget deficit or surplus of the Federal Government. c. require the Treasury to print and issue additional currency. d. purchase gold in sufficient amounts to back the U.S. dollar.
Clarity Bank has a money multiplier of 12. If Ayesha deposits $75,000 into her account at Clarity, her money could potentially create ______ in new money.
a. $6,250 b. $75,000 c. $900,000 d. $583,333