If a $1 million open market purchase by the Fed generates a new deposit at a bank that immediately causes the bank's reserves held at the Fed to increase by $1 million,
then the T-account effects are that the bank's assets and liabilities ________ by $1 million and that the Fed's assets and liabilities ________ by $1 million.
A) decline; decline
B) increase; decline
C) decline; increase
D) increase; increase
D
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Refer to Figure 2-3. Carlos Vanya grows tomatoes and strawberries on his land. A portion of his land is more suitable for growing tomatoes and the other portion is better suited for strawberry cultivation
Which of the graphs in Figure 2-3 represent his production possibilities frontier? A) Graph A B) Graph B C) Graph C D) either Graph A or Graph B E) either Graph B or Graph C
All else held constant, as the variance of a payoff increases, the
A) expected value of the payoff increases. B) risk of the payoff increases. C) expected value of the payoff decreases. D) risk of the payoff decreases.
Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his first cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct?
a. Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. b. Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. c. Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. d. Chad places a higher value on his second cup of latté than on his first cup of latté.
Ben owns stock in two similar, large, financially sound corporations. Company A consistently earns rates of return of 12 percent per year, while company B regularly generates rates of return of 8 percent per year. If Ben is attempting to arbitrage, he
will: A. sell his stock in company B and buy more stock in company A. B. sell his stock in company A and buy more stock in company B. C. keep his portfolio balanced with an equal or nearly equal number of shares of each stock. D. buy stock in other companies in an effort to diversify and minimize risk.