As the Federal Reserve ________ bonds, interest rates fall and the price of bonds ________
A) sells; rises B) buys; rises C) sells; falls D) buys; falls
B
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The three categories of federal government expenditures, in addition to government purchases, are
A) interest on the national debt, defense spending, and transfer payments. B) defense spending, Social Security, and Medicare. C) defense spending, budgets of federal agencies, and transfer payments. D) interest on the national debt, grants to state and local governments, and transfer payments.
Empirical studies find that exchange rates are much more variable than inflation differentials. How can we explain this empirical result?
What will be an ideal response?
Which statement most nearly describes a Nash equilibrium applied to price competition?
A) Two firms cooperate and set the price that maximizes joint profits. B) Each firm automatically moves to the purely competitive equilibrium because it knows the other firm will eventually move to that price anyway. C) Given the prices chosen by its competitors, no firm has an incentive to change their prices from the equilibrium level. D) One dominant firm sets the price, and the other firms take that price as if it were given by the market.
Asset price inflation occurs when the prices of assets rise.
Answer the following statement true (T) or false (F)