Which of the following policies would be most likely to reduce the rate of inflation?
A. sale of government bonds by the Federal Reserve
B. a reduction in the discount rate
C. an increase in the size of the federal budget deficit
D. a reduction in the required reserves imposed on the banking system
Answer: A
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What was(were) the effect(s) of the Enron Bankruptcy in late 2001 and other corporate scandals in 2002?
A) An ensuing lack of confidence in financial accounting. B) The value of corporate bonds declined. C) It became more expensive for firms to finance their investments. D) all of the above E) none of the above
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower