The Fed sells $1 million in bonds to a bond dealer. The bond dealer's bank experiences
A) a decrease in assets of $1 million as its reserves decrease and an increase in liabilities of $1 million as its deposits rise.
B) a decrease in assets of $1 million as its reserves decrease and a decrease in liabilities of $1 million as its deposits fall.
C) no change in assets or liabilities.
D) an increase in assets of $1 million as its deposits fell by $1 million, and a decrease in liabilities as its reserves fell by $1 million.
B
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If, for a producer, large changes in price lead to relatively small changes in quantity, the producer's
A) demand is price elastic. B) demand is price inelastic. C) supply is price elastic. D) supply is price inelastic.
Why might firms pay wages that are above the equilibrium wage in a market?
A) to reduce the unemployment rate B) to encourage workers to form labor unions C) to increase the productivity of their workers D) to reduce profit
Explain the dilemma that supply shocks pose when the Fed chooses to use monetary policy to achieve its goals
What will be an ideal response?
The figure above shows the U.S. demand and U.S. supply curves for cherries. At a world price of $2 per pound, the production of cherries in the United States will equal
A) 200,000 pounds. B) 400,000 pounds. C) 600,000 pounds. D) 800,000 pounds. E) 0 pounds.