In 2008, Timothy Geithner referred to investment banks, money market mutual funds, hedge funds, and other financial firms engaged in similar activities as the
A) shadow banking system.
B) commercial banking system.
C) securitization market.
D) secondary market.
Answer: A
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When the Fed makes an open market purchase of government bonds, it does so with the intention of decreasing the money supply
Indicate whether the statement is true or false
Brand name aspirin is chemically identical to store brand aspirin. Yet, consumers often prefer the brand name product to the store brand product. This preference is an example of
A) product differentiation. B) perfect product competition. C) oligopolistic product competition. D) price taking behavior.
Two variables are positively correlated if:
A. they move in the same direction. B. they move in the opposite direction. C. their movements tend to be unrelated. D. one is simply a multiple of the other.
Say that initially the nominal interest rate is 6% and prices are stable, but the inflation rate the following year rises to 3%. If the real rate of interest is to remain unchanged, the nominal interest rate in the second year must:
a. rise by 9 percentage points. b. rise by 6 percentage points. c. rise by 3 percentage points. d. remain unchanged.