Refer to the diagram for the federal funds market. A $25 billion increase in reserves will change the interest rate to:
A. 3.0 percent.
B. 3.5 percent.
C. 4.0 percent.
D. cannot be determined with the above information.
D. cannot be determined with the above information.
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A relative price is the
A) slope of the demand curve. B) difference between one money price and another. C) slope of the supply curve. D) ratio of one money price to another.
In the Keynesian theory, an exogenous decrease in the demand for money shifts
a. the LM curve to the right. b. the LM curve to the left. c. the IS curve to the right. d. the IS curve to the left. e. neither the IS or LM curves.
Which of the following is not true of Lindahl prices for collective consumption goods?
a. Lindahl pricing might be useful in achieving political agreement on the proper amount of the public good to be produced. b. Lindahl prices are set so the marginal benefit they receive from the public good is equal to the marginal cost. c. Lindahl prices are difficult to calculate in practice. d. Lindahl prices are necessary for economic efficiency.
A rise in bond prices would cause the price of a dollar to rise.
a. true b. false