A decrease in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
A) increases; increases
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Which of the following is a difference between a second-price sealed-bid auction and an English auction?
A) The highest bidder wins in a second-price sealed-bid auction while the second-highest bidder wins in an English auction. B) The second-highest bidder wins in a second-price sealed-bid auction while the highest bidder wins in an English auction. C) Bids are placed privately in a second-price sealed-bid auction while bids are placed publicly in an English auction. D) Bids are placed one after another in a second-price sealed-bid auction while bids are placed simultaneously in an English auction.
Which of the following will reduce the velocity of circulation of the money stock?
A. The inflation rate increases. B. The interest rate falls. C. Credit cards are used more frequently. D. More employees are paid once a week instead of once a month.
When economists talk about the gains from trade they mean that
A) no one ever gets hurt by trade. B) the benefits of trade outweigh the losses. C) business firms benefit from trade but not necessarily individuals. D) trade increases government revenue through taxes on imports. E) economic restructuring is usually quick and painless.
Suppose two goods are perfect substitutes. The price elasticity of demand of one of the goods is
A. 1. B. 0. C. infinity. D. 10.