The wholesale price of cranberries in the market is currently $0.83/lb. The quantity supplied at this price is 90,000 pounds. The quantity demanded is 95,000 pounds. In this case, there is:
a. Excess supply in the market and this is a signal for sellers to decrease price
b. Excess supply in the market and this is a signal for suppliers to increase price
c. Excess demand in the market and this is a signal for consumers to buy less
d. Excess demand in the market and this is a signal for consumers to buy more
e. The market is in equilibrium
c. Excess demand in the market and this is a signal for consumers to buy less
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Refer to Figure 19-8. The equilibrium exchange rate is at A, $1.25/euro. Suppose the European Central Bank pegs its currency at $1.00/euro. At the pegged exchange rate,
A) there is a surplus of euros equal to 700 million. B) there is a shortage of euros equal to 500 million. C) there is a shortage of euros equal to 200 million. D) there is a surplus of euros equal to 300 million.
If Treasury deposits at the Fed are predicted to ________, the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves
A) rise; defensive; drain B) fall; defensive; drain C) rise; dynamic; inject D) fall; dynamic; drain
When the Fed sells foreign assets and buy domestic assets at the same time,
A) its assets and liabilities rise by the same amount. B) its assets and liabilities fall by the same amount. C) the composition of its assets changes, but its liabilities are unaffected. D) the composition of its liabilities changes, but its assets are unaffected.
Suppose Reta is planning for retirement in a two-period world. In the first period Reta is young and earns $1 million, and in the second period Reta is old and retired and earns nothing. The interest rate is initially 10 percent, but then it falls to 7 percent. After the interest rate falls, the
a. substitution effect will induce Reta to consume more when she is young. b. substitution effect will induce Reta to consume less when she is young. c. income effect will induce Reta to consume more when she is young. d. change in interest rates affects the substitution effect but not the income effect.