"When the Fed buys securities from a bank, the quantity of money eventually decreases by a fraction of the initial change in the monetary base." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
The statement is wrong on two counts. First, if the Fed buys securities from a bank, the quantity of money increases rather than decreases. Second, the money multiplier points out that the change in the quantity of money is ultimately greater than, not less than, the initial change in the monetary base.
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Cyclical unemployment includes people who become unemployed from
A) normal labor market turnover. B) changes in the seasons. C) changes in international competition. D) technological changes. E) changes in the business cycle.
If a straight line passes through the point x = 12 and y = 4 and also through the point x = 4 and y = 8, the slope of this line is
A) seven tenths. B) negative 8 divided by 4. C) one -and one half. D) negative one half.