Suppose the federal funds rate is 5 percent. If the Fed decides to increase the target for the federal funds rate from 5 percent to 6 percent, it could take:
A. an offensive action and reduce reserve requirements.
B. an offensive action and raise reserve requirements.
C. a defensive action and raise reserve requirements.
D. a defensive action and reduce reserve requirements.
Answer: B
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When social costs of an activity exceed private costs
A. this means that resources are being efficiently used. B. there is a tendency for resources to be under-utilized. C. there is a tendency for resources to be over-utilized. D. None of these is correct.
The aggregate demand curve shifts due to changes in consumption expenditures, investment expenditures government spending, and net exports
a. True b. False Indicate whether the statement is true or false
Perfectly competitive markets do not exist in the real world
Indicate whether the statement is true or false
In the perfectly competitive market, individual firms exert no effect on the market price. Therefore, the firm's marginal revenue is:
A. zero. B. an upward-sloping curve. C. a downward-sloping curve. D. the same as the firm's demand curve.