1) Open-market operations lead to what kind of change? A) A change in the size of the money multiplier, but not to the commercial bank reserves B) A change in the commercial bank reserves, but not to the size of the money multiplier C) A change in neither the commercial bank reserves nor to the size of the money multiplier D) A change in both the commercial bank reserves and the size of the money multiplier 2

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1) Open-market operations lead to what kind of change?

A) A change in the size of the money multiplier, but not to the commercial bank reserves

B) A change in the commercial bank reserves, but not to the size of the money multiplier

C) A change in neither the commercial bank reserves nor to the size of the money multiplier

D) A change in both the commercial bank reserves and the size of the money multiplier

2. Which of the following is a statement of Say's Law?

A) Demand creates its own supply

B) Supply creates its own demand.

C) The costs of production decrease as output increases.

D) The costs of production increase as output increases

3. Which school of thought believed that long-run equilibrium occurs automatically and is the normal state of affairs in a market economy?

A) Keynesians

B) Neoclassicists

C) Supply-siders

D) Symbolic analysts

4. According to Keynes, what determines interest rates?

A) The level of saving

B) The level of investment

C) The velocity of money

D) Both saving and investment

E) The interaction of the demand and supply of money

5. All of the following, except one, are pillars on which neoclassical theory is built. Which is the exception?

A) The flexibility of production

B) The validity of Say's Law

C) The flexibility of prices

D) The flexibility of interest rates

E) The flexibility of wages