Assuming an economy is initially at potential output, in the long run, an expansionary monetary policy is expected:
A. not to affect output in either the short run or the long run.
B. to affect output in both the short run and the long run.
C. not to affect output in the long run.
D. to affect output, but only in the long run.
Answer: C
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Which of the following holds the reserves of private banks in the United States?
A) The Treasury Department B) The Fed C) The Pentagon D) Various venture capitalists
Suppose capital and labor are perfect substitutes resulting in a production function of q = K + L. That is, the isoquants are straight lines with a slope of -1
Derive the long-run total cost function TC = C(q) when the wage rate is w and the rental rate on capital is r.
The burden of the public debt
a. cannot be passed to future generations b. can be passed to future generations to the extent that it is unevenly distributed between the rich and the poor c. can be passed to future generations to the extent that it is held by foreigners d. can be passed to future generations to the extent that it is held by corporations e. can be passed to future generations to the extent that it is held by state and local governments
Which of the following scenarios would make monetary policy the most difficult to address?
A) A worldwide spike in oil prices resulting in higher production costs. B) A rise in unemployment that causes consumers to spend less. C) A reduction in business confidence that leads to a reduction in investments D) A booming housing market that causes inflation to rise.