In a liquidity trap situation:
a. The Fed could not appreciably lower short term interest rates
b. If the Fed added reserves to the banking system, it would have little effect on investment.
c. Traditional monetary policy would be relatively weak in its effects on aggregate demand.
d. All of the above are true.
d
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If there is no Ricardo-Barro effect, an increase in the government budget surplus
A) increases the supply of loanable funds. B) decreases private saving. C) increases private saving. D) decreases the supply of loanable funds. E) has no effect on the demand for loanable funds, the supply of loanable funds, or the real interest rate.
Refer to Table 11-1. Diminishing marginal returns sets in when the ________ worker is hired
A) 2nd B) 3rd C) 4th D) None of the above; the production function displays increasing marginal returns.
Compared to the distribution of money income, the distribution of income that takes into consideration the effects of taxes and in-kind benefits
a. is less even b. is the same c. is more even d. is fairer e. is less fair
Real business cycle theory emphasizes that an adverse supply shock will shift the LRAS curve leftward and cause a decline in Real GDP
Indicate whether the statement is true or false