The Federal Reserve cannot target both the money supply and the interest rate because it does not control
A) bank reserves. B) open market operations.
C) money demand. D) the discount rate.
C
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Suppose firms in a perfectly competitive industry are making economic profits. As a result I. new firms enter the industry. II. the market price falls. III. the economic profits of the existing firms decrease
A) I, II and III B) I and II C) II and III D) I and III
Price fixing is an agreement among competing managers to ________ the prices of the products they are selling or to ________ the prices of the inputs they are buying.
A) raise; lower B) raise; raise C) lower; raise D) lower; lower
A third party is a person, or persons, who
a. consumes goods produced from at least two intermediate inputs b. avoids the transactions of the two principal parties c. takes risks to avoid externalities d. internalizes the costs of market failure e. is imposed upon by the activity of others