In the above figure, if the economy is initially at an equilibrium output at point A and the interest rate is r1, then an open market purchase of bonds by the Fed will
A) not have any impact on short- or long-run equilibrium real Gross Domestic Product (GDP).
B) cause interest rates to decline to r2, investment to decline, and aggregate demand to shift inward to the left.
C) cause interest rates to increase and output to decline.
D) cause interest rates to decline to r2, investment to increase to I2, and the AD curve to shift upward to the right.
D
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Along a perfectly vertical demand curve, the price elasticity of demand
A) equals 0. B) is greater than 0 but less than 1.0. C) equals 1.0. D) is negative.
Which of the following antebellum banking innovations was the forerunner of the modern Federal Deposit Insurance Corporation (FDIC)?
a. the Suffolk System b. the Safety Fund Act c. the Forstall System d. the bimetallic standard
A successful advertising campaign would likely
a. increase price elasticity of demand by stressing the uniqueness of the product. b. reduce price elasticity of demand by stressing the uniqueness of the product. c. reduce price elasticity of demand by informing consumers of the availability of substitutes. d. not alter the demand curve. e. generally make the demand curve shift inward.
A monopolist earns higher profits by charging one price than by practicing price discrimination
a. True b. False Indicate whether the statement is true or false