If the Federal Reserve wished to increase interest rates using open market operations, it would
A. buy corporate stocks.
B. buy US government securities.
C. sell US government securities.
D. buy gold.
Answer: C
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If the government were to decrease its spending, it would expect aggregate demand to:
A. fall, and thus GDP to fall. B. rise, and thus GDP to fall. C. fall, and thus GDP to rise. D. rise, and thus GDP to rise.
Country A is facing increasing inflation. Country B wants to help Country A but first wants to understand the scale of the problem. Which of the following methods will an economist in Country B use to assess the magnitude of the problem?
a. He or she will calculate the GDP deflator for Country A and compare it with the GDP deflators for countries with known low and moderate inflation rates. b. He or she will calculate the nominal GDP of Country A and compare it with the GDP deflators of countries with known low and moderate inflation rates. c. He or she will calculate the GDP deflator for Country A and compare it with the GDP deflators for other countries in Country A's region. d. He or she will calculate the nominal GDP of Country A and compare it with the nominal GDP of other countries in Country A's region.
Which of the following statements is correct?
a. If marginal cost is rising, then average total cost is rising. b. If marginal cost is rising, then average variable cost is rising. c. If average variable cost is rising, then marginal cost is minimized. d. If average total cost is rising, then marginal cost is greater than average total cost.
In the classical model, an increase in aggregate demand will lead to an increase in wage rates while a decrease in aggregate demand will
A. leave wages unchanged since workers will not take a cut in pay. B. increase wages since business will be desperate for labor. C. decrease wages. D. change the price of capital.