Which of the following is a tool the Fed uses to adjust the quantity of money?
i. The Fed can change the interest rate banks charge for loans to their prime customers.
ii. The Fed can change the discount rate on loans to banks.
iii. The Fed can buy or sell government securities.
A) i only B) ii only C) iii only D) i and iii E) ii and iii
E
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In a production possibilities frontier diagram, the attainable production points are shown as
A) the points inside and the points on the production possibilities frontier. B) only the points inside the production possibilities frontier. C) any of the production points. D) only the points beyond the production possibilities frontier. E) only the points on the production possibilities frontier.
If the marginal propensity to save is 0.4, then a $2 million increase in disposable income will
A) increase consumption by $5 million. B) decrease consumption by $1.2 million. C) increase consumption by $1.2 million. D) decrease consumption by $5 million.