When the Federal Reserve System was first established, which of the following was its chief responsibility?
a. Keeping the inflation rate low and stable
b. Ensuring the stability of the banking system
c. Achieving full employment of the labor force
d. Keeping the interest rate low and stable
e. Keeping output growth high and stable
B
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Differences in climate among nations
a. could lead to economic efficiency b. reduce opportunities for gains from international trade c. lower the terms of trade in favor of warm-climate nations d. may create opportunities for international trade e. raise the terms of trade in favor of warm-climate nations
Identify the Marginal External Benefit (MEB) function, and briefly explain what this function is measuring.
Suppose you are a public official responsible for setting a retail disposal charge on antifreeze. Estimated marginal benefit and cost functions for antifreeze are as follows: MPB = 10.0 – 0.5Q MPC = MSC = 1.0 + 0.4Q MSB = 10.0 –1.1Q, whereMPB, MSB, and MPC are measured in dollars per gallon, and Q is in millions of gallons.
Which of the following is most consistent with the basic postulate of economics: changes in incentives exert a predictable impact on human behavior?
a. Farmers produce fewer bushels of wheat in response to an increase in the price of wheat. b. People will buy more milk at a price of $3 per gallon than at $2 per gallon. c. People will buy less gas if the price of gas increases by $0.50 per gallon. d. People will consume more beef if the price increases from $1 to $2 per pound.
When money is held as an asset, it is serving as a:
A. unit of account. B. standard of value. C. medium of exchange. D. store of wealth.