Which of the following best illustrates the fallacy of composition?
a. If I have more money, I will be better off; therefore if we all had more money, we all would be better off
b. If I buy more gas each week, my gas consumption increases; therefore, if all gas consumers buy more gas each week, total gas consumption will increase.
c. If I spend more time studying, I will learn more; therefore, if all students spend more time studying, they will learn more.
d. If women's hemlines are higher this year, the Dow Jones Industrials average will fall.
a
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If there is a temporary increase in the money supply in the Eurozone, ceteris paribus, what is the result for the United States?
a. The money supply in the United States must decrease by the same proportion. b. The U.S. dollar nominal interest rate will increase, as the euro rate is unchanged. c. Long-run expectations shift to expect a stronger euro. d. The dollar appreciates against the euro.
If the required reserve ratio is 100 percent, could the Federal Reserve still change the money supply with open market operations? Explain whether they could or could not
What will be an ideal response?