An important role of central banks during a financial crisis is:
A. eliminating bank reserves.
B. passing new bank regulations.
C. acting as the lender of last resort.
D. closing banks.
Answer: C
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As long as the loanable funds market clears, Say's law holds
a. True b. False
In order to accurately capture the multiplier effect, it is important to know:
A. what people's expectations of the future are. B. real GDP. C. what proportion of their additional income people spend. D. individual's wealth.
Total market supply can be derived by
A) horizontally summing individual supply curves at each and every price level. B) vertically summing individual supply curves at the current technology level. C) adding up the largest quantity demanded at various prices. D) looking at the changes in the price of raw materials needed to produce the product.
Answer the following questions true (T) or false (F)
1. Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas. 2. Because many business situations are repeated games, firms may be able to avoid the prisoner's dilemma and implicitly collude to keep prices high. 3. Firms are more likely to find themselves in a prisoner's dilemma in sequential games as opposed to simultaneous games.