Which is not a function of the Fed?
A. Serving as a lender of last resort
B. Providing financial services such as check clearing to commercial banks
C. Conducting monetary policy
D. Directly financing U.S. budget deficits
Answer: D
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Most economists believe that the CPI overstates the actual changes in prices while the chain index for GDP understates them
Indicate whether the statement is true or false
Buying at a low price in one market and reselling at a higher price in another market will
A) not generate any profit because of transactions costs. B) not generate any profit because of transportation costs. C) eventually eliminate all of the price differences. D) eventually eliminate most, but not necessarily all, of the price differences.
The fourth step of the four step process is to
a. identify the new equilibrium and then compare the original equilibrium price and quantity to the new equilibrium price and quantity. b. decide whether the economic change being analyzed affects demand or supply. c. draw a demand and supply model before the economic change took place. d. decide whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram.
Consider Figure 8.9. If the players choose independently, what will be the outcome?
A. Becky chooses a low price and David chooses a low price. B. Becky chooses a high price and David chooses a low price. C. Becky chooses a low price and David chooses a high price. D. Becky chooses a high price and David chooses a high price.