The Federal Reserve didn't always communicate its actions to the public like it does today. As recently as the mid-1990s, secrecy ruled. Why do you think the Fed and most central banks now are more public about their actions and the reasons for them?
What will be an ideal response?
In principles of economics we learn that information enables prices to adjust faster and if prices adjust markets are more efficient. In a sense that is what is happening here. If the central bank is going to be a stabilizing force it should provide information on a timely basis so that financial markets can adjust faster and minimize the volatility that otherwise would occur. Rapid adjustment in financial and other markets speeds the response of the economy to monetary policy, making it more effective.
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If the demand and supply both increase equally, then the equilibrium price ________ and the equilibrium quantity ________
A) increases; increases B) increases; does not change C) does not change; increases D) increases; decreases E) decreases; does not change
A drop in dollar price of British pounds means that
a. fewer dollars are needed to buy British pounds b. more dollars are needed to buy British pounds c. the mark has appreciated d. the dollar has depreciated e. British goods are now more expensive to Americans
Producer surplus increases as the price of a good decreases.
Answer the following statement true (T) or false (F)
Refer to the information provided in Table 14.2 below to answer the question that follows. Table 14.2B's Strategy ?AdvertiseDon't Advertise??A's profit $100 millionA's profit $200 million?AdvertiseB's profit $100 millionB's profit $50 millionA's Strategy????Don'tA's profit $50 millionA's profit $75 million?AdvertiseB's profit $200 millionB's profit $75 millionRefer to Table 14.2. Firm A?s dominant strategy is
A. dependent on what Firm B does. B. to not advertise. C. to advertise. D. indeterminate from this information, as no information is provided on Firm A?s risk preference.