Assuming a decrease in money demand, then to keep interest rates constant the Fed must
a. keep the money supply constant.
b. conduct an open market sale of bonds.
c. accommodate the decreased demand for money by the public by increasing the money supply.
d. All of the above
e. None of the above
B
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If the required reserve ratio is 5 percent, then the simple deposit multiplier is
A) 2. B) 5. C) 10. D) 20.
A firewood supplier has a very seasonal demand for its product. Its transport trucks lay idle during the warmer parts of the year. It can exploit economies of scope if
a. It merges with a manufacturer of wooden Christmas ornaments b. It turns into a rental trucking company during the warmer months for other seasonal producers such as ice-cream makers c. It starts producing other seasonal products that would sell mostly during the warmer months such as rustic lawn chairs d. B and C
A line that is perfectly elastic has an elasticity of demand of zero
a. True b. False Indicate whether the statement is true or false
In reality, the long-run supply curve for a perfectly competitive market is upward sloping because:
A. of changing costs of production that firms may face. B. experienced firms will have different information and costs than new firms. C. not all firms have identical cost structures. D. All of these are true.