Members of the Federal Reserve Board of Governors:
A. are appointed to 4-year terms.
B. are confirmed by the House of Representatives.
C. frequently need to deal with political pressures.
D. are members of the Federal Open Market Committee.
Answer: D
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Consider a consumer who consumes only 
and 
. The price of 
falls.
a. On a graph
with 
on the horizontal and 
on the vertical axis, illustrate the change in this consumer's budget constraint assuming exogenous income I.
b. Illustrate income and substitution effects for 
assuming that both goods are normal.
c. Can you tell whether the cross-price demand curve for 
is upward or downward sloping?
d. Suppose 
is leisure hours and 
is a composite consumption good. Consider an increase in the wage assuming a fixed endowment of leisure (and no exogenous source of income). How is your graph similar and how is it different from what you graphed in (a) through (c)?
e. Is the leisure-demand curve a cross-price demand curve? Why or why not?
What will be an ideal response?
Agency problems in the subprime mortgage market included all of the following EXCEPT
A) homeowners could refinance their houses with larger loans when their homes appreciated in value. B) mortgage originators had little incentives to make sure that the mortgagee is a good credit risk. C) underwriters of mortgage-backed securities had weak incentives to make sure that the holders of the securities would be paid back. D) the evaluators of securities, the credit rating agencies, were subject to conflicts of interest.
Economists believe that the optimal level of pollution is zero
a. True b. False Indicate whether the statement is true or false
Among the losers from inflation are
a. savers and borrowers b. landlords and the government c. borrowers and the government d. those on a fixed income and borrowers e. those on a fixed income and savers