In which of the following examples does the firm acquire financial capital from households through a financial intermediary?
A. A firm sells a bond to John Doe.
B. The firm sells a bond to an employee pension fund.
C. The firm uses retained earnings to purchase shares of its stock owned by a mutual fund company.
D. The firm uses retained earnings to purchase shares of its stocks owned by individuals.
Answer: B
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When interest rates fall, the IS schedule will experience
A) rightward movement along the curve. B) leftward movement along the curve. C) a shift to the left. D) a shift to the right.
Keynes argued that when interest rates were high relative to some normal value, people would expect bond prices to ________, so the quantity of money demanded would ________
A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase
If a bank borrows from a Federal Reserve Bank, the interest rate is called
A) the prime rate. B) the discount rate. C) the Fed funds rate. D) the reserve availability rate.
Under perfect competition, if marginal cost is below price, then a producer can benefit from increasing his or her output.
Answer the following statement true (T) or false (F)