Which of the following is a policy tool of the Fed?
i. setting the required reserve ratios
ii. conducting open market operations
iii. quantitative easing
A) i only B) ii only C) iii only D) Both i and ii E) i, ii, and iii
E
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A major advantage of monetary policy over fiscal policy is that monetary
A. policy affects all sectors of the economy equally. B. policy can be put into effect more quickly. C. policy, once implemented, takes effect more quickly. D. authorities see the need for policy more quickly.
The supply and demand model is the workhorse of the principles of economics because it:
A. follows directly from the inductive approach to economics. B. is a useful model by which students can be introduced to economic reasoning. C. does not have to have any empirical testing to back up the results of the model. D. is a perfect model and can never be improved upon.