Bank runs
a. will affect neither the money supply nor the money multiplier.
b. increase the money supply.
c. can be neither prevented nor mitigated by the Federal Reserve.
d. are a problem because banks only hold a fraction of deposits as reserves.
d
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If the Fed set and achieved a goal of zero unemployment,
A) the inflation rate would increase. B) real GDP would equal potential GDP. C) they would have an easier time achieving the goal of price stability. D) the natural rate of unemployment would be negative.
The laissez-faire approach popular before the Great Depression influenced the U.S. government to see business downturns as: a. natural phases in an otherwise healthy system and to therefore take short-term deficit spending measures to help recovery. b. natural phases in an otherwise healthy system and to therefore wait for recovery to occur naturally
c. serious maladies in an otherwise healthy system and to therefore work to redesign the system to avoid such failure in the future. d. failures of the type of system Adam Smith envisaged and to therefore work to move toward an open economy with free trade. e. failures of the system to achieve the form that Adam Smith envisaged and to therefore work to decrease government interference at the micro level.