Based on the model of the money market, if the Federal Reserve increases the reserve requirement, the equilibrium interest rate should:
A. stay the same.
B. increase.
C. decrease.
D. increase to the same extent that the demand for money increases.
Answer: B
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Based on the table and information in the previous question, which of the following is TRUE?
A) George prefers to make $15,000 with certainty than make the investment. B) George prefers making the investment than to make $15,000 with certainty. C) George is indifferent between making $15,000 with certainty and making the investment. D) As the investment has risk George should not make it under any circumstances.
A monopolistically competitive industry may feature
a. excess capacity. b. extraordinary profits. c. product differentiation. d. All of the above are correct. e. Only b and c are correct.
In the long run, the greater burden of a specific tax will usually be absorbed by:
a. consumers. b. the party—consumers or producers—with the more elastic demand/supply curve. c. the party with the least elastic demand/supply curve. d. shareholders and employees of the firm in the form of reduced dividends and wages.
A decrease in the price level in an economy will _____
a. increase the real value of dollar-denominated assets b. shift the aggregate expenditure line downward c. decrease the equilibrium level of output demanded d. cause an upward movement along the aggregate demand curve e. shift the aggregate demand curve leftward