The federal funds rate is the interest rate that:
A. the Fed charges to banks that borrow from it.
B. banks charge the Fed for using their reserves.
C. the Fed pays on bank reserves.
D. banks charge each other for borrowed money.
Answer: D
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To maximize its revenue
A) a firm facing inelastic demand should always raise its price. B) a firm facing elastic demand should always raise its price. C) a firm should always charge the highest price possible regardless of the elasticity of demand. D) None of the above answers is correct.
The endowment effect suggests that that people
A) are concerned about the welfare of others. B) act in ways to distort market prices. C) have a strong attachment to their entitlement, regardless of whether they paid to acquire it. D) have a strong sense of fairness.
Which of the following statements is true?
a. The money price is usually the same as the time price for most consumers. b. The money price of a good is always greater than the time price. c. The money price is always greater for high-wage earners than for low-wage earners. d. The time price is usually less for low-wage earners than for high-wage earners. e. The time price of a good is directly proportional to the money price.
Which of the following will always be true when an economy is in long-run equilibrium?
a. The level of prices will be constant (that is, inflation will be zero). b. Actual output will exceed the potential output. c. The actual rate of unemployment will be less than the natural rate of unemployment. d. The output of the economy will correspond with the full-employment output.