"A shortage in the loanable funds market occurs when the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded." Explain why this statement is correct or incorrect
What will be an ideal response?
The statement is incorrect because a shortage occurs when the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied.
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Describe the four distinct tools of policy that the Federal Reserve can use to influence the money supply. How would the Fed use each of these tools to either increase or decrease the money supply?
What will be an ideal response?
Differentiate between a change in demand and a change in quantity demanded
What will be an ideal response?
An example of a market failure is
A) a firm is dumping toxic waste that is making people sick. B) when not everyone who wants to see a major league football game can. C) when there is an increase in demand and a shortage develops. D) unemployment.
You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon?
A. $57 B. $8 C. $12 D. $22