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 down
B. slopes up
C. is perfectly elastic
D. is perfectly inelastic
The? ________ due to a countercyclical policy during a recession is? ________ when wages are downwardly rigid than when wages are flexible.
A. increase in? employment; lower
B. increase in interest? rates; lower
C. increase in? taxes; higher
D. increase in? employment; higher
Which of the following is likely to happen due to quantitative easing by the? Fed?
A. leftward shift of the demand curve for bank reserves
B. A leftward shift of the supply curve of bank reserves
C. A rightward shift of the demand curve for bank reserves
D. rightward shift of the supply curve of bank reserves
Which of the following is likely to happen if the quantity of bank reserves held at the Fed? increases?
A. The number of loans issued by banks decrease.
B. The real interest rate increases.
C. The stock of money in the economy increases.
D. Bank deposits decrease.
If the federal funds rate is set by the Taylor rule and the output gap increases by 5 percentage? points, everything else remaining? unchanged, the federal funds rate should? ________.
A. increase by 5 percentage point
B. increase by 2.5 percentage points
C. decrease by 5 percentage points
D. decrease by 2.5 percentage points
Which of the following should be increased during a? recession?
A. Government spending
B. Nominal interest rate
C. Real interest rates
D. Income taxes
If the value of a Government minus−taxation multiplier is? 1.8, which of the following is likely to be true if all other variables remain? unchanged?
A. A? $1 increase in taxation increases gross domestic product by? $1.80.
B. A? $1.80 reduction in taxation increases gross domestic product by? $1.80.
C. A? $1 reduction in taxation increases gross domestic product by? $1.80.
D. A? $1.80 increase in taxation increases gross domestic product by? $1.80.