One method used by the Federal Reserve to prevent abuse of the discount facility is
A) higher bank taxes.
B) higher reserve requirements.
C) tighter bank surveillance.
D) selling fewer government securities to the banks involved.
C
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Give an example of a price floor. Draw a corresponding diagram and explain why there is a continuing surplus.
What will be an ideal response?
Refer to Table 17-1. Suppose the output price is $3. If the wage rate is $90, what is the profit-maximizing quantity of labor that the firm should hire?
A) 7 units B) 5 units C) 4 units D) 3 units
Assume a firm is run as a zero-profit enterprise. Which of the following would be true?
A) There is a higher probability that wage reductions would outweigh layoffs. B) Those in charge would not act any different than regular owners, there would still be layoffs. C) Those not in charge would remain risk neutral. D) Wage reductions would be lower than they would be if the firm was run for profit.
According to economists, competitive firms
A) compete for the same customers. B) are price takers. C) differentiate their products. D) are able to change output and affect the market price.