Answer the following statements true (T) or false (F)
1. When the Fed sells government securities in the open market, its intent is to try to increase aggregate demand.
2. An expansionary monetary policy increases the money supply, lowers interest rates, and increases aggregate demand.
3. If the monetary authority wishes to rein in inflation, it would buy government securities in the open market.
4. In order to stimulate the economy and reduce unemployment, the Fed will set a lower target for the federal funds rate.
5. In the cause-effect chain of monetary policy an autonomous increase in investment spending when the economy is at full employment will cause the Fed to seek a lower target for the federal funds rate by buying securities in the open market.
1. False
2. True
3. False
4. True
5. False
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Always There Wireless is wireless monopolist in a rural area. There are 200 customers, each of whom has a monthly demand curve for wireless minutes of Qd = 200 - 100P, where P is the per-minute price in dollars and Q is the number of wireless minutes. The marginal cost of providing the wireless service is $0.25 per minute. If Always There charges $0.25 per minute and the largest fixed fee that it can, what is Always There's profit per customer?
A. $153.13 B. $196.88 C. $200 D. $175
The price elasticity of demand measures how much
a. quantity demanded responds to a change in price. b. quantity demanded responds to a change in income. c. price responds to a change in demand. d. demand responds to a change in supply.
The signaling aspect of the market system refer to
A) legal requirements for contracts and exchanges. B) the price of the good to the consumer and producer. C) the voluntary character of the exchange. D) transaction costs of carrying out exchanges.
The Clinton administration inherited a budget deficit from its predecessor. President Clinton instituted major tax increases that
A) reduced the budget deficit but increased the federal debt. B) reduced the size of the deficit but could not eliminate it. C) increased the budget deficit during his entire term. D) brought the budget into balance and eventually into a surplus.