The market for immediately available reserve balances at the Federal Reserve is known as the:
A. money market.
B. long-term bond market.
C. short-term bond market.
D. federal funds market.
D. federal funds market.
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The change in saving divided by the change in income is the:
a. propensity to save. b. saving function. c. average propensity to save. d. extra propensity to save. e. marginal propensity to save.
A price increase for pizza will reduce the quantity of pizza demanded because it reduces a buyer's purchasing power. This is called :
a. income effect b. the alternative effect c. the substitution effect d. the normal good effect
It makes economic sense to borrow when you are buying something with a ________________ payoff, even if it creates a trade deficit.
a. long-run b. short-run c. positive d. negative
The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always equals:
A. 1. B. 0. C. the interest rate. D. the marginal propensity to invest (MPI).