Market clearing prices in a market system act as
A) a signaling device.
B) a direct measure of resource costs.
C) a way for producers to advertise.
D) a legally determined rationing device.
Answer: A
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When players cannot achieve their goals because they are unable to make credible threats or promises, the situation is called a:
A. Nash equilibrium. B. prisoner's dilemma. C. failure of dominant strategies. D. commitment problem.
Which of the following policy tools is directly controlled by the Trading Desk at the Federal Reserve Bank of New York?
A) the spread between the discount rate and the federal funds rate B) the spread between the federal funds rate and the interest rate on banks' required reserves C) open market sales and purchases D) the required reserve ratio
When a Pigouvian tax is imposed, ________
A) the marginal private cost curve shifts upward B) the demand curve shifts rightward C) the marginal social cost curve shifts downward D) the marginal social benefit curve shifts downward
Monetarists believe in all of the following except
a. steady growth in inflation will yield stable output. b. steady growth in the money supply will yield stable output. c. fluctuations in the money supply are responsible for business cycles. d. the Fed should not be involved in trying to stabilize the economy.