When the Fed buys federal government securities on the open market from commercial banks, over time, the:
A. assets of these banks fall.
B. liabilities of the bank fall.
C. assets of the banks rise.
D. liabilities of the bank rise.
Answer: C
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Happy Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $5 and a 50 percent chance of a low demand of $4. Free Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $6 and a 50 percent chance of a low demand of $3. Which of the following statements is true?
A) All else equal, neither Free Cows nor Happy Cows can benefit from an accurate forecast. B) All else equal, an accurate forecast is more valuable to Happy Cows than Free Cows. C) All else equal, an accurate forecast has the same value to both Free Cows and Happy Cows. D) All else equal, an accurate forecast is more valuable to Free Cows than Happy Cows.
Money as a medium of exchange I. Facilitates the exchange of goods II. Reduces the incentive to barter
A) I only B) II only C) Both I and II D) Neither I nor II
For a monopolist that is maximizing profits
A) price exceeds marginal cost. B) price equals marginal revenue. C) price equals average total cost. D) marginal revenue exceeds price.
The economic problem associated with the idea of scarcity is that
a. resources are limited but wants are insatiable b. wants are limited to the available resources c. resources are unlimited but wants are limited d. both resources and wants are limited e. both resources and wants are unlimited