If saving is less than investment, the appropriate countercyclical monetary policy would be:
A. an open market sale of government bonds.
B. a cut in the reserve requirement.
C. a cut in the federal funds rate.
D. a cut in the discount rate.
Answer: A
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Refer to Figure 6.1. Which of the following statements is false?
A) At point E the marginal product of labor is decreasing. B) At point E the marginal product of labor is negative. C) At point E the average product of labor is decreasing. D) At point E the average product of labor is negative. E) At point E the marginal product of labor is less than the average product of labor.
Market activity differs from government activity because
a. markets generally force prices to below-cost levels b. governments never charge for the services they provide c. markets do not use voluntary exchange mechanisms d. markets provide a direct link between benefits and costs e. governments have strong incentives to keep costs under strict control