Which of the following would cause a reduction in M1?
A) an increase in the required ratio of reserves to deposits
B) a reduction in the discount rate
C) an open market operation where the Fed sells bonds
D) all of the above
E) none of the above
C
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Which of the following would not be considered an automatic stabilizer?
A) rising corporate income tax revenues due to an expanding economy B) increasing food stamp payments due to more people becoming unemployed during a recession C) legislation increasing funding for job retraining passed during a recession D) decreasing unemployment insurance payments due to increased employment during an expansion
Consider two situations: In situation A the production of widgets is monopolized by a single firm. In situation B the production of widgets is perfectly competitive. In both situations the supply of labor to widget makers is infinitely elastic at a wage of w. Which of the following statements is true?
a. The marginal value product of labor will be the same in the two cases. b. The marginal value product of labor is higher in case B than in case A. c. The marginal value product of labor is higher in case A than in case B. d. From the information given it is not possible to make a definite statement about the marginal value product of labor.