The reason the substitution effect works to encourage a consumer to buy less of a product when its price increases is:
A. The real income of the consumer has been increased
B. The real income of the consumer has been decreased
C. The product is now relatively more expensive than it was before
D. Other products are now relatively more expensive than they were before
C. The product is now relatively more expensive than it was before
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The Fed's countercyclical policy tools to eliminate a recession include lowering:
a. the required reserve ratio, cutting the discount rate, and selling government bonds on the open market. b. the required reserve ratio, raising the discount rate, and selling government bonds on the open market. c. the required reserve ratio, raising the discount rate, and buying government bonds on the open market. d. the discount rate, cutting the discount rate, and raising the margin requirement. e. the reserve requirement, lowering the discount rate, and buying government bonds on the open market.
A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company. As a result of these transactions, by how much and in which direction did: A. U.S. net exports change? B. U.S. net capital outflow change?
To speed up the economy, the Fed typically uses __________ monetary policy; and to fight against the high rate of inflation, the Fed typically uses __________ monetary policy.
a. expansionary; expansionary b. expansionary; contractionary c. contractionary; contractionary d. contractionary; expansionary
The threat of rejection in market transactions:
A. leads to higher prices as sellers try to cover possible losses. B. leads to better products and lower prices for consumers. C. leads to less cooperation between buyers and sellers. D. does all of these.