When the Fed buys U.S. government securities from a bank, that bank's excess reserves and required reserves increase but total reserves decrease
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose that two roommates share a bathroom. Jeff, your roommate, makes a mess with toothpaste in the sink. This bothers the other roommate, Justin. According to the Coase Theorem, one necessary condition to alleviate the externality of toothpaste in the sink is that
A. either Jeff or Justin own the house (and therefore the bathroom). B. neither Jeff nor Justin own the house (and therefore do not own the bathroom). C. Jeff has the right to leave the toothpaste and Justin cannot do anything else. D. Justin has a right to a clean bathroom and Jeff has to clean up the toothpaste.
The figure above shows that to make the price support work, the government buys ________ million tons of sugar beets
A) 10 B) 20 C) 30 D) 5 E) 15
Which of the following correctly describes how an increase in the price level affects consumption spending?
A) An increase in the price level lowers real wealth, which causes consumption to decrease. B) An increase in the price level raises real wealth, which causes consumption to increase. C) An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase. D) An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
The collapse of the subprime mortgage market
A) did not affect the corporate bond market. B) increased the perceived riskiness of Treasury securities. C) reduced the Baa-Aaa spread. D) increased the Baa-Aaa spread.