Recall the Application about the Fed's policy of quantitative easing to answer the following question(s). This Application refers to quantitative easing, a policy that occurs when the Fed:
A. changes the reserve requirement.
B. sells mortgage-backed securities.
C. purchases long-term securities.
D. raises the discount rate.
Answer: C
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Which of the following does NOT describe a compensating variation?
A. The amount of money that exactly compensates a consumer for a change in economic circumstances B. The amount of money that produces an equivalent effect on a consumer's well-being C. The most someone is willing to pay to experience something beneficial D. The least someone is willing to receive to experience something harmful
An increase in government spending by $100 would, if the MPC = 0.90, result in an increase in real GDP by:
A. $1,000. B. $9,000. C. $900. D. $190.
The price level has been rising 5 percent a year for 10 years and is expected to continue to do so. The nominal rate of interest is 4 percent. The real rate of interest is
A. 9 percent. B. 5 percent. C. 1 percent. D. -1 percent.
Which of the following activities is NOT included in the production process?
A) determining the value of the goods B) making the goods C) packaging the goods D) transporting the goods