In the market for bank reserves, if the federal funds rate target is higher than the federal funds rate, the Fed will take action to ________ reserves
A) increase both the demand for and the supply of
B) decrease the demand for
C) decrease the supply of
D) increase the demand for
E) increase the supply of
C
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Taxing some citizens to provide welfare grants to other citizens has been called by some "coercive charity." The economist's case for "coercive charity" assumes
A) it is efficient to transfer a dollar from a wealthy person to someone with little income. B) morality cannot be legislated. C) people are basically selfish. D) people who genuinely want the poor to be helped often do not provide any help. E) redistributing income promotes more rapid economic growth.
If tea and coffee are substitutes, the cross elasticity of coffee with respect to the price of tea will be ________ and an increase in the price of tea will ________ the demand for coffee
A) positive; increase B) negative; decrease C) negative; increase D) positive; decrease
When people smoke cigarettes, their friends and family members may become sick. This affects GDP by
A. reducing GDP by the amount of medical care needed. B. reducing GDP by the cost of the cigarettes purchased. C. increasing GDP by the cost of the medical care and the cost of the cigarettes purchased. D. decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased.
The owner of Tie-Dyed T-shirts, a perfectly competitive firm, hires you to give him economic advice. He tells you that the market price for his shirts is $15 and that he is currently producing 200 shirts at an AVC of $10 and an ATC of $20. What would you recommend that he do?
A. Continue to produce in the short run, even though he is earning a loss, and expand production in the future hoping to increase market share and total revenue. B. Shut down in the short run, as he is incurring a loss, and leave the industry in the long run, if there are no changes in economic conditions. C. Continue producing in the short run, as his loss from production is less than his fixed costs, but exit the industry in the long run if there are no changes in economic conditions. D. Tell him that you cannot make any recommendations until you know what his fixed costs are.