Assume the First Bank of Townsville makes a loan of $2,500. This loan will
A) increase the First Bank of Townville's liabilities at the Fed.
B) have no change on the quantity of money, just its composition.
C) increase the First Bank of Townville's reserves.
D) increase the quantity of money initially by $2,500.
E) decrease the quantity of money initially by $2,500.
D
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If there is unemployment in an economy, then the
A) economy is operating at an unattainable point. B) production possibilities frontier will shift inwards. C) production possibilities frontier must be bowed inward. D) economy is producing at a point inside the production possibilities frontier. E) production possibilities frontier will shift outwards.
If the price index was 100 in 2000 and 120 in 2010, and nominal GDP was $360 billion in 2000 and $480 billion in 2010, then the value of 2010 GDP in terms of 2000 dollars would be
A) $300 billion. B) $384 billion. C) $400 billion. D) $424 billion.