Refer to the above figure. Which panel is consistent with the Fed buying bonds?
A. Panel A
B. Panel B
C. Panel C
D. Panel D
Answer: B
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Keynes hypothesized that the precautionary component of money demand was primarily determined by the level of
A) interest rates. B) velocity. C) income. D) stock market prices.
In the long run, if some monopolistically competitive firms are earning economic losses then
A) firms will leave the industry. B) raise prices until they earn economic profits. C) they will increase production until marginal costs fall. D) new firms will enter the industry.
Intermediation in the financial system is the process of:
A. bringing together buyers and sellers in a market. B. negotiating terms of repayment when agreements between buyers and sellers are in default. C. government intervention in a financial market. D. an arbitrator working with government and private firms to create an efficient financial system.
In cases of extreme annual inflation, such as in thousands of percent or higher, people are no longer willing to hold currency or accept it from others
a. True b. False