During the great recession, the Chair of the Fed, Ben Bernanke introduced a new, untraditional, Fed tool to help stimulate the economy. What is this tool known as?
A. Quantitative Easing
B. Too big to fail
C. Bank bailout
D. Monetary stimulus
Answer is A. Quantitative Easing [This is an application (tool) of monetary policy by which a central bank (Federal Reserve), loosens monetary policy further after having dropped the Federal Funds rate to the zero range.]
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When negative externalities are involved, the market is said to
A. fail, because it underproduces the good connected with the negative externality. B. fail, because it overproduces the good connected with the negative externality. C. succeed, because it produces the socially optimal quantity of the good connected with the negative externality. D. be "in optimum," because the equilibrium fully adjusts for the negative externality.
. The mid-point method of calculating elasticity is typically used because:
A. it is easier to calculate. B. it is universally understood by all economists. C. the negative sign can then be ignored. D. it is a consistent way to estimate the elasticity of demand between two points on a demand curve, regardless of the direction of the movement.
The balanced budget multiplier is always equal to 1
a. True b. False Indicate whether the statement is true or false
An appropriate countercyclical policy in the face of a recession would be for the Fed to raise legal reserve requirements, raise the discount rate, and buy government securities
Indicate whether the statement is true or false