The interest rate the Fed charges banks borrowing from the Fed is the
A) federal funds rate.
B) Treasury bill rate.
C) discount rate.
D) prime rate.
C
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Which of the following is NOT true of adverse selection?
A) It would not exist in a world of perfect information. B) It arises because borrowers typically know more than lenders. C) It describes a lender's problem of distinguishing the good-risk applicants from the bad-risk applicants. D) It describes a lender's problem in verifying borrowers are using their funds as intended.
Suppose that there is an improvement in technology in the market for iPhones. Which of the following is TRUE?
A) Supply will increase and the market clearing price will fall. B) Supply will increase and the market clearing price will rise. C) Demand will increase and the market clearing price will rise. D) Demand will increase and the market clearing price will fall.
An insurance company offering discounts to students with high grades in school an example of:
A. screening. B. signaling. C. statistical discrimination. D. building a reputation.
Monetarists and classical economists:
A. assume that stimulative monetary policy will create high levels of GDP without inflation. B. assume that stimulative monetary policy will create high levels of GDP and slightly high prices. C. assume the economy operates at full employment and stimulative monetary policy will only cause the price level to rise. D. assume that the economy operates at full employment and stimulative monetary policy will increase both aggregate supply and aggregate demand.