Using the money demand and money supply model, an open market purchase of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to
A) not change. B) decrease.
C) increase. D) increase if the economy is in a recession.
B
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Most Americans
A. have accurate perceptions of the level of corporate profits. B. underestimate corporate profits. C. overestimate corporate profits. D. believe that corporations earn zero profit.
In the figure above, an increase in income would result in the budget line
A) making a parallel shift toward point a. B) making a parallel shift toward point c. C) becoming flatter. D) becoming steeper.
When the Fed conducts expansionary monetary policy, it __________ in the short run, but __________ in the long run.
A. boosts demand; causes inflation B. causes inflation; boosts output C. causes inflation; boosts economic growth D. boosts demand; boosts supply
Sarah buys little stuffed animals for $5 each. They come in different varieties. If the producer stops making (retires) a certain variety, a stuffed animal of that variety will be worth $100; otherwise it is worth $0. There is 50% chance that any variety will be retired. When Sarah buys her next stuffed animal, the expected profit is
A) $50. B) $47.50. C) $45.00. D) $0.