The misallocation of resources associated with price supports:
A. affects both domestic and foreign economies.
B. affects only foreign economies.
C. affects only the domestic economy.
D. is fully offset by reductions in food prices.
Answer: A
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When the Fed engages in an open market purchase, the money supply ________ and the nominal interest rate ________.
A. increases; increases B. decreases; increases D decreases; decreases C. increases; decreases
The government passed the Economic Recovery Act in October 2008 to prevent the financial crisis from continuing to worsen. A controversial component of this act was the
A) temporary decrease in the federal deposit insurance limit. B) sale of new subprime mortgage assets. C) borrowing of $150 million from AIG. D) Troubled Asset Relief Program (TARP).
Double coincidence of wants is a situation in which: a. a country exports the good that it can produce at minimum cost
b. a country imports a good that it cannot produce at all. c. two people each want some good or service that the other person is able to provide. d. two people each consume the goods that they can produce themselves.
Fiscal policy
What will be an ideal response?