If the Fed buys bonds in an open market operation, which of the following is most likely to occur?
a. the equilibrium level of GDP will decrease.
b. the money supply will decrease.
c. the aggregate demand curve will shift to the right.
d. the interest rate will rise.
e. the aggregate supply curve will shift to the left.
C
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A firm should consume physical capital until:
A) the value of the total product of physical capital equals the price of physical capital. B) the value of the average product of physical capital equals the price of physical capital. C) the value of the marginal product of physical capital equals the price of physical capital. D) the value of the marginal product of physical capital equals the value of the marginal product of labor.
If a monopolist owns or controls a key resource necessary for production, it is a source of:
A) legal market power. B) natural market power. C) regulated market power. D) restricted market power.
Which of the following best explains why airlines often cut their ticket prices at the last-minute in order to fill the remaining empty seats on their flights?
A) The Federal Aviation Administration ranks each airline based on the percentage of flights that are fully booked. These rankings affect the decisions of firms to use a particular airline to fly their employees to business meetings. B) Fixed costs in the airline industry are very large, but the marginal cost of flying one more passenger is very low. C) Airlines receive a subsidy from the government for each flight that is fully booked and departs on time. D) Cutting prices makes the airlines more popular with their customers, who may fly with the same airline in the future as the result of buying low-price tickets.
Which of the following statements about barriers to entry is false?
A) They restrict entry into industries in which positive economic profits are being made. B) They are somewhat lessened by the existence of patents. C) They may be due to legal impediments such as licenses. D) They may be due to a single firm controlling access to a natural resource or production process.