An open market sale of U.S. Treasury securities by the Fed will cause the Fed's balance sheet to show:
A. an increase in the asset category of securities and the liability category of reserves.
B. a decrease in the asset of securities and a decrease in the liability of reserves.
C. no change in the size of the balance sheet, just the composition of assets will change from securities to cash.
D. an increase in the liability of reserves.
Answer: B
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When negative externalities are present, it leads to an underallocation of resources in that area relative to that which is socially desirable
a. True b. False Indicate whether the statement is true or false
Assume that DeShawn is a single parent who is in poverty. He receives food stamps and Medicaid. For every $100 that he earns, DeShawn loses $35 of his food stamp benefits and $20 in his Medicaid benefits. Also, DeShawn's income is taxed at a rate of 10 percent. Then, Peter's effective marginal tax rate is
a. 45 percent. b. 55 percent. c. 65 percent. d. 70 percent.
If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about
a. 0.5, and supply is elastic. b. 0.5, and supply is inelastic. c. 2, and supply is inelastic. d. 2, and supply is elastic.
The maximum price that a buyer will pay for a good is called
a. consumer surplus. b. willingness to pay. c. equilibrium. d. efficiency.