According to the Economics in Action story “A Crushing Reversal” in the slides of chapter 7, what happened to the market for wine in the US between the mid-1990s and 2002? In the mid-1990s, demand for wine in the US increased, which first resulted in higher wine prices and profits until…
A) some producers exited the market so that lower supply pushed prices up even further.
B) some producers exited the market so that lower supply pushed prices down again.
C) new producers entered the market so that higher supply pushed prices up even further.
D) new producers entered the market so that higher supply pushed prices down again.
Answer: D) new producers entered the market so that higher supply pushed prices down again.
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Primary assets held by the Federal Reserve are
a. loans to commercial banks. b. U.S. government securities. c. Federal Reserve notes. d. reserve deposits by banks.
When buying a car from a commission salesman you improve your bargaining position by
a. shopping for last year's model when the new model year cars are arriving b. shopping when the showroom is full of customers c. shopping when the car lot has few cars left unsold d. shopping toward the beginning of the month
Which of the following statements is most correct?
A. The discount rate is the primary policy tool of the FOMC. B. The difference between the target and actual federal funds rate is the dealer's spread. C. The FOMC sets the target federal funds rate range. D. The FOMC sets the federal funds rate.
Suppose the exchange rate for 1 euro is $1.40. Purchasing power parity exists if a fast-food meal in the United States costs $5 and in Paris, that same fast-food meal costs:
a) 2.59 euros. b) 3.43 euros. c) 3.57 euros. d) 7 euros.