In the market for reserves, if the federal funds rate is above the interest rate paid on excess reserves, an open market purchase ________ the ________ of reserves which causes the federal funds rate to fall, everything else held constant
A) increases; supply
B) increases; demand
C) decreases; supply
D) decreases; demand
A
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To achieve allocative efficiency, an economy
A) must produce on its PPF. B) does not necessarily need to be production efficient. C) must have increases in technology. D) might leave some resources unemployed. E) can produce either on or within its PPF.
A market with one or a small number of firms but no barriers to entry is known as
A) a natural monopoly. B) a contestable market. C) a perfectly competitive market. D) monopolistic competition.
An increase in the nominal interest rate increases the quantity of credit card services because
A) bank profits go up. B) of intertemporal substitution. C) the opportunity cost of making transactions with money has risen. D) the substitution effect is greater than the income effect.
A jurisdictional dispute is a
A) strike by a union in sympathy with another union's strike or cause. B) dispute involving two or more unions over which should have control of a particular jurisdiction. C) business enterprise in which employees must belong to the union before they can be hired and must remain in the union after they are hired. D) legal environment in which businesses may hire nonunion members conditional on their joining the union by some specified date after employment begins.