To achieve its target when the federal funds rate is above the target range, the Fed could:
A. increase the reserve requirement.
B. sell bonds.
C. buy bonds.
D. increase the discount rate.
Answer: C
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Refer to Figure 2-8. Suppose Vidalia is currently producing 120 dozen roses per period. How many orchids is it also producing, assuming that resources are fully utilized?
A) 20 dozen orchids B) 32 dozen orchids C) 44 dozen orchids D) 68 dozen orchids
The substantial risks taken by financial intermediaries like Sallie Mae because they are effectively insured are examples of what economists refer to as: a. sub-prime behavior
b. asymmetric information. c. moral hazard. d. countercyclical policy.
To reach the socially optimal allocation of resources, the amount of government revenue received from a pollution tax should be
a. equal to the negative externality cost associated with producing the good b. less than the negative externality cost of producing the good c. greater than the negative externality cost of producing the good d. equal to the private cost of producing the good e. greater than the private cost of producing the good
Suppose Mexico can produce 5 autos or 10 corn. Suppose the United States can produce 4 autos or 20 corn. If opportunity costs are constant for both countries, then
A) the United States has a comparative advantage in corn production. B) Mexico has a comparative advantage in corn production. C) the United States cannot gain from trade with Mexico. D) the United States has a comparative advantage in auto production.