How would the Fed's sale of government bonds on the open market affect the money supply?
What will be an ideal response?
The Fed, by selling bonds, is decreasing the supply of money, because it is taking money out of the hands of people who would otherwise deposit it in a bank, which would in turn loan it out, etc.
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Financial markets are a key institution of growth because:
A. without them there would be no incentive to invest. B. they move funds from those who save to those who invest. C. they allow people to plan better for retirement. D. without them people would not save.
Increasing the stock of capital while holding the labor force constant will ________ output at a(n) ________ rate.
A. increase; increasing B. increase; decreasing C. decrease; increasing D. decrease; decreasing
The lemons problem is a situation of
A. a natural monopoly. B. perfect competition. C. price discrimination. D. asymmetric information.
If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula
A) 0.17 B) 0.62 C) 1.62 D) 5