A company may borrow money from
A. banks.
B. insurance companies.
C. other firms.
D. All of these responses are correct.
Answer: D
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Why does the Fed have imperfect control over the money supply?
A. Because the Fed does not know how much reserves will change when it buys or sells securities. B. Because of unpredictable changes in the public’s desire to hold cash and banks’ desires to hold reserves. C. Because of unpredictable changes in reserve requirements. D. Because of the secrecy of FOMC meetings, which lead to policy surprises.
The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. Which of the following would lead the quantity of doughnuts in Kaffenia to differ from the efficient quantity?
A) The existence of many producers and sellers of doughnuts. B) The existence of just one producer and seller of doughnuts. C) Damage to the environment from the disposal of oil used to cook the doughnuts. D) Both answers B and C are correct.
The asset demand for money is
A) greater at high interest rates as investors can earn more on their investments. B) greater at low interest rates, because the opportunity cost of holding money is low. C) greater at low interest rates, because the opportunity cost of holding money is high. D) lower at low interest rates, because the opportunity cost of holding money is high.
A duopoly is:
A. a strategy that benefits both firms. B. an agreement, explicit or implied, between two firms. C. an oligopoly with two firms. D. two firms agreeing to act like a joint monopolist.