Positive Econ Statements
What will be an ideal response?
What IS (factual) statements
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Forward contracts are of limited usefulness to financial institutions because
A) of default risk. B) it is impossible to hedge risk. C) they are relatively inflexible. D) of interest-rate risk.
How did the Fed's conduct of open market operations change during the economic crisis of 2008?
a. Open market operations are no longer the most common tool that the Fed utilizes. b. The Fed now buys and sells a broader range of assets than only government securities. c. The Federal Open Market Committee cannot act without the approval of the Treasury. d. The Fed now must have adequate funds available before purchasing government securities.
If firms in a monopolistically competitive industry are making an economic profit,
A. price is higher than marginal cost. B. new firms will enter the industry. C. economic profit will fall in future periods. D. all of the above E. none of the above
If consumers spend 75 cents out of every extra dollar received, the:
A. MPS is 0.75. B. MPC is 0.25. C. Multiplier is 4. D. Multiplier is 7.5.