If the Fed buys a $1,000 U.S. government bond from a bank, it pays for it by giving the bank $1,000 in reserves—reserves that it simply creates out of thin air

What is regulatory capture?

A) It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest. B) It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest. C) It is a situation in which a policymaker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign. D) It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents.

If consumption = $2,000, investment = $600, government purchases = $500, net exports = ?$40, transfer payments = $340, then _____

a. GDP = $2,720 b. GDP = $3,060 c. GDP = $3,140 d. GDP = $3,400 e. GDP = $3,340