Which of the following describes the law of diminishing control?
A. After regulations are enacted, institutions find ways around the regulations.
B. The Federal Reserve Bank cannot impact excess reserves and the money supply.
C. Financial institutions have few ways to assess the solvency of borrowers.
D. As people engage in leverage, they have less and less control over the price of the asset.
Answer: A
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By keeping the basket of goods and services the same when computing the CPI, the Bureau of Labor Statistics isolates the effects of price changes from the effect of any quantity changes that might be occurring at the same time
a. True b. False Indicate whether the statement is true or false
When a new firm enters a monopolistically competitive market, the individual demand curves faced by all existing firms in that market will
a. shift to the left. b. shift to the right. c. shift in a direction that is unpredictable without further information. d. remain unchanged. It is the supply curve that will shift.
Economists who believe there is a short-run trade-off between inflation and unemployment attribute it to the ______.
a. complete flexibility of prices b. complete flexibility of wages c. slow adjustment of input prices d. fast adjustment of input prices
The ________ of inventories is the level at which the extra cost of adding to inventory is equal to the extra gain from such addition.
A. minimum level B. desired level C. maximum level D. cost-maximizing level