Which term refers to a legally established maximum price that firms may charge?
A) a price ceiling
B) a subsidy
C) a price floor
D) a tariff
Answer: A
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Refer to Figure 15-7. Suppose the Fed sells Treasury Bills in pursuit of contractionary monetary policy. Using the static AD-AS model in the figure above, this situation would be depicted as a movement from
A) B to C. B) B to D. C) C to B. D) C to D. E) A to B.
An open-market sale of Treasury bills by the Fed not only reduces the money supply but also
A. Lowers T-bill prices and raises interest rates. B. Drives up T-bill prices and pushes down interest rates. C. Lowers T-bill prices and pushes down interest rates D. None of these.
Warren Buffett feared gaining weight. To keep himself from eating too much, he gave unsigned checks for $10,000 to his children, promising to sign them if he exceeded his desired weight by a certain date. This is an example of:
A. sunk costs. B. an abductive decision. C. an inductive decision. D. a precommitment strategy.
When stock markets crash because of changes in the expected future sale price of an asset rather than changes in fundamental stock price determinants, economists refer to the situation as
A. God's will. B. a ghost. C. just desserts. D. a bubble.