As you move up the production possibility frontier, the absolute value of the marginal rate of transformation
A. initially decreases, then increases.
B. increases.
C. initially increases, then decreases.
D. decreases.
Answer: B
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Funds held in bank accounts that can be withdrawn by depositors at any time without advance notice are called:
A. demand deposits. B. required reserves. C. free funds. D. flow funds.
When the Fed sells bonds, the:
A. discount rate increases. B. discount rate decreases. C. federal funds rate increases. D. reserve requirement falls.
Which of the following is a major reason why the Medicare program is in such financial trouble?
A. Workers are not paying enough into the program. B. There is a shortage of medical school applicants. C. The government set reimbursement rates too high. D. Because medical services are subsidized by the government, both consumption by the elderly and the cost of services have increased.
Considering the government-sponsored enterprises like Freddie Mac, fannies me, and others, do you see any indication that the managers of these agencies are creating a moral hazard? Explain.
What will be an ideal response?