The Fed and the government are working against each other if, as the government cuts taxes to promote economic growth, the Fed
A. sells government securities.
B. buys government securities.
C. lowers the discount rate.
D. lowers the prime rate.
Answer: A
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Suppose the elasticity of labor demand is 1.4. Then a decrease in the wage rate will:
A. Decrease total wage income B. Increase total wage income C. Have no impact on total wage income D. Have an indeterminate impact on total wage income
In the long run when an increase in the quantity of output increases average total cost, this is called:
A. economies of scale. B. diseconomies of scale. C. constant economies to scale. D. minimum average total cost.
If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $1 million open market purchase by the Fed will result in what change in loans?
A. An increase of $10 million B. No change C. An increase of $1 million D. A decrease of $1 million
Behavioral economics uses concepts and theories to explain the systematic patterns in how we behave that lead to consistently erroneous decisions. These patterns are called:
A. cognitive biases in the field of psychology. B. cognitive dissonance in the field of psychology. C. receptive biases in the field of anthropology. D. disruptive biases in the field of anthropology.