Suppose that the marginal propensity to consume (MPC) is .75 and there is an increase in investment spending of $100,000. As a result, equilibrium real Gross Domestic Product (GDP) would increase by
A) $400,000. B) $75,000. C) $100,000. D) $750,000.
A
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A study conducted by Alberto Alesina and Lawrence Summers concluded that countries with highly independent central banks had ________ than countries whose central banks had little independence
A) lower unemployment rates B) higher unemployment rates C) higher inflation rates D) lower inflation rates
Which of the following is false?
a. The Fed controls the supply of money, even though privately owned commercial banks actually create and destroy money by making loans. b. With a 10% required reserve ratio, a $10,000 cash deposit in a bank would result in an increase in the bank's excess reserves by $1000. c. With a 10% required reserve ratio, a $1,000 bond purchase by the Fed directly creates $1,000 in money in the form of bank deposits, and indirectly permits up to $9,000 in additional money to be created through the multiple expansion in bank deposits. d. When the Fed sells government bonds, it will tend to cause a multiple contraction of bank deposits.
Passive policy advocates believe that uncertain lags and ignorance about how the economy works prevent policy makers from accurately determining and effectively implementing the appropriate active policy
Indicate whether the statement is true or false
According to the representative heuristic, people are more likely to believe that something belongs to a given category if:
A. people believe that they themselves are members of the category. B. it shares characteristics with the stereotypical members of that category. C. people can recall other members of the category. D. it is unlike the stereotypical members of that category.