Which of the following changes is observed when the Fed increases the federal funds rate?
a. Inflation is brought to an immediate halt
b. The inflation rate increases for several months, but then begins to decrease.
c. Major banks try to offset this change by lowering the interest rates they charge on loans.
d. Major banks try to offset this change by lowering the interest rates they pay on savings deposits.
e. Major banks raise the prime interest rate that they charge to their best customers.
e
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A problem with Leontief's methodology is that
A) he had no information on U.S. and foreign factor endowments. B) he did not use information on foreign factor intensities. C) he ignored the roles of other factors of production such as natural resources. D) All of the above are problems.
In the Classical view, inflation is the result of
A) excessive monetary growth. B) speculation. C) government spending. D) natural disasters.
In the Kyoto Protocol, participating nations agreed to
A) trade carbon-dioxide permits. B) eliminate all emissions of greenhouse gases by 2020. C) reduce their overall emissions of greenhouse gases between 1997 and 2020 to as much as 20 percent below 1990 levels. D) buy greenhouse gas emission permits from developing nations.
Critics of price regulation suggest that some firms
A. will lack the incentive to run their business efficiently. B. will underestimate their costs and lead to bankruptcy. C. will sue the federal government for damages. D. will set their price equal to marginal cost instead of average cost.