In the market for reserves, if the federal funds rate is above the interest rate paid on excess reserves, an open market purchase ________ the supply of reserves and causes the federal funds interest rate to ________, everything else held constant
A) decreases; fall
B) increases; fall
C) increases; rise
D) decreases; rise
B
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Which of the following would not be included in the calculation of accounting profit?
A. The rent paid by the owner for the use of a building. B. The salary the owner could have earned working elsewhere. C. The medical insurance coverage for the company's workers. D. The wages paid to the company's workers.
Suppose the government wants to discourage excessive consumption of alcohol. It therefore imposes a per-unit tax on alcohol that increases as more alcohol is bought by a consumer at a store. What happens to a consumer's budget at a liquor store (with liters of alcohol on the horizontal axis and a composite good on the vertical) --- assuming the consumer takes only one trip to the store.
A. The vertical intercept decreases and the slope becomes shallower as more alcohol is bought. B. The vertical intercept remains constant but the slope becomes shallower as more alcohol is bought. C. The vertical intercept decreases and the slope becomes steeper as more alcohol is bought. D. The vertical intercept remains constant but the slope becomes steeper as more alcohol is bought. E. None of the above.
All of the following are methods of rationing goods EXCEPT
A) political power.
B) the profit motive.
C) first come, first served.
D) prices.
The price elasticity of demand is defined as the:
A. Percentage change in quantity demanded times the percentage change in price. B. Unit change in price divided by the unit change in quantity demanded. C. Percentage change in quantity demanded divided by the percentage change in price. D. Unit change in quantity demanded times the unit change in price.