Suppose the required reserve ratio is 0.2, and the Fed buys $5,000 of U.S. government securities from Bank A, which lends $4,000 and keeps $1,000 in its vault as cash. In this round of the money-creation process, the M1 money supply has increased by:
a. $1,000
b. $4,000.
c. $5,000.
d. $10,000.
e. $3,000.
b
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Which of the following statements characterize an oligopoly market? a. Oligopoly firms are guaranteed profits due to the lack of competition
b. Firms are aware that their own economic behavior will influence the decisions of rivals. c. There are few barriers to entry. d. Firms choose price and output independently from the decisions made by competitors.
Horizontal equity means that equally situated individuals should be taxed equally.
Answer the following statement true (T) or false (F)
________ occurs when the price level of goods and services increases over several months.
A) Monetarism B) A budget deficit C) An open-market operation D) Inflation E) A recession
Explain why the portion of the national debt owed to foreigners is a serious matter, whereas the portion owed to U.S. citizens is of less concern. Why does the U.S. national debt pose less of a problem than the debts of Greece in 2010?
What will be an ideal response?