Suppose output is $1000 billion, government purchases are $200 billion, desired consumption is $700 billion, and desired investment is $150 billion. Net foreign lending would be equal to

The theory of efficiency wages suggests that

a. above-equilibrium wages increase worker productivity. b. workers with higher levels of education earn more than workers with lower levels of education. c. workers signal their high ability to potential employers by completing formal years of schooling. d. union workers earn more than nonunion workers.

If the actual money multiplier equals the potential money multiplier, and if the Fed wishes to reduce the money supply by $1 million when the reserve ratio is 10 percent, then the Fed should

A. buy $100,000 of government securities. B. sell $10,000 of government securities. C. sell $100,000 of government securities. D. buy $10,000 of government securities.