Discount lending by the Fed:
A. amounts to five billion dollars in volume during an average week.
B. is usually small except in times of crisis.
C. is more important today than in years past.
D. is the key component of monetary policy.
Answer: B
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Financial intermediaries are able to act as delegated monitors for individual savers because
A) other investors are unable to gain a free ride on their monitoring efforts. B) borrowers consider this role to be traditional for financial intermediaries and are willing to put up with it. C) the federal government has granted them waivers from laws protecting privacy. D) they employ a vast network of private detectives to carry out their monitoring role.
Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.Table 1.2Production Possibilities for BombersCombinationNumber of B-1 BombersOpportunity cost(Foregone Stealth)Number of Stealth BombersOpportunity cost (Foregone B-1)A20Na195 B35 180 C45 150 D50 100NAOn the basis of Table 1.2, the law of increasing opportunity costs applies to
A. Stealth bombers but not to B-1 bombers. B. B-1 bombers. C. Both B-1 bombers and Stealth bombers. D. Neither bomber.
Suppose a consumer has determined that her reservation price, R, is $75. The expected benefit of an additional search at this reservation price is $25. Based on this information we can conclude that:
A. this consumer will accept any price below $75. B. search costs are $25 per search. C. search costs are $25 per search, and this consumer will accept any price below $75. D. this consumer will reject any price above $25.
Services include all of the following EXCEPT
A. school tuition. B. the face value of a corporate bond. C. payment for a restaurant meal. D. payment for a doctor's visit.