State whether the following statement is true or false AND explain why: "An increase in the interest rate paid on excess reserves will always cause an increase in the federal reserve funds rate."
Indicate whether the statement is true or false
False. If the interest rate paid on excess reserves is set below the federal funds rate, an increase in the interest rate paid on excess reserves will only cause an increase in the federal funds rate if the interest rate paid on excess reserves is increased above the original federal funds rate level. If the increase in the interest rate paid on excess reserves is such that the new rate is still below the federal funds rate, then the federal funds rate does not change, everything else held constant.
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Something is an inferior good if
A) the demand for it decreases when its price rises. B) the demand for it decreases when its price falls. C) the demand for it increases when income rises. D) the demand for it increases when income falls.
Refer to Figure 11-10. Identify the minimum efficient scale of production
A) Qa B) Qb C) Qc D) Qd
If an item has several good substitutes, the demand curve for that item is likely to be
A) relatively inelastic. B) relatively elastic. C) perfectly inelastic. D) unit elastic.
On an afternoon that a class meets, you could alternatively study for an exam that will take place in another class the next morning, go to a movie with a friend, or, most desirable to you at present, take a nap. The opportunity cost of attending the
afternoon class is A) forgoing the nap. B) missing seeing the movie with your friend. C) giving up the time to study for the next morning's exam. D) being unable to engage in all three of the above activities.