A rightward shift in the supply curve of reserves held at the Fed ________. A) reduces the federal funds interest rate B) increases unemployment C) reduces the price level D) increases the tax rates ANSWER A
The purchasing power of the dollar A) varies directly with the purchasing power of other major currencies such as the euro and the Japanese yen. B) varies inversely with the price level. C) varies directly with the price level. D) varies directly with the price of gold. ANSWER B
Gross Domestic Product is a measure of ________, not a measure of ________. A) income; production B) sales; production C) sales; consumption D) production; sales ANSWER D
Some economists believe that a positive aggregate demand shock to an economy with large amounts of excess capacity and unemployment does not necessarily cause an increase in prices. Economists who adhere to this belief are followers of A) Keynesian economics. B) Say’s laws of economics. C) classical economics. D) supply-side economics. ANSWER A
When the price level goes up, the purchasing power of the dollar A) varies directly with the value of the euro. B) remains constant. C) also increases. D) falls. ANSWER D
If the horizontal axis measures the quantity of bank reserves and the vertical axis measures the interest rate, the demand curve for bank reserves ________. A) slopes up B) is perfectly elastic C) slopes down D) is perfectly inelastic ANSWER C
Assuming all else equal, any change that causes an increase in the credit supply at a given real interest rate will cause: A) the credit supply curve to shift to the left. B) a downward movement along the credit supply curve. C) an upward movement along the credit supply curve. D) the credit supply curve […]
Which of the following relationships is likely to exhibit negative correlation? A) The relationship between inflation in the U.S. and traffic congestion in China B) The relationship between amount saved with a bank and the interest earned C) The relationship between the amount of precipitation in a year and the number of umbrellas sold D) […]
Which of the following statements has been proposed as a benefit of passive policy making? A) When using passive policy making there is no tradeoff between price stability and unemployment. B) Passive policy making allows for making immediate changes in response to an anticipated change in economic performance. C) Passive policy making utilizes the rational […]
If no foreign residents owned any of the U.S. public debt, then it would be true that A) U.S. residents would essentially owe the public debt to themselves. B) there would be no distributional consequences associates with he public debt. C) there would be no interest payments on the public debt. D) the public debt […]