Prior to 2008, a bank might have borrowed reserves from another bank because:
A. banks never borrowed from the Fed.
B. it kept its reserves too low and could not meet Fed requirements.
C. borrowing reserves from other banks is the only way to gain access to reserves.
D. it was in danger of becoming insolvent and collapsing.
Ans: B. it kept its reserves too low and could not meet Fed requirements.
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Lee and Cody are playing a game in which Lee has the first move at A in the decision tree shown below. Once Lee has chosen either aggression or cooperation, Cody, who can see what Lee has chosen, must choose either aggression or cooperation at B or C. Both players know the payoffs at the end of each branch. 
Suppose Lee and Cody enter into a binding non-aggression agreement. As part of that agreement, they negotiate a fine that Cody would have to pay to Lee if Cody chooses aggression after Lee chooses cooperation. For the fine to be effective, it would have to be:
A. less than 15. B. equal to 40. C. equal to 25. D. at least 15.
We calculate many different kinds of price indexes:
A. to measure how different groups of people in the economy are being affected by changing prices. B. to see how the prices of different groups of goods are changing. C. in order to capture a complete picture of how price changes are affecting the economy. D. All of these statements are true.
A perfectly competitive firm maximizes its profit by
A) setting its price so that it exceeds the marginal revenue. B) choosing to produce the quantity that sets MC equal to MR. C) cutting wages. D) manipulating demand.
One characteristic of built-in or automatic stabilizers is that
A) they require no new legislative action by Congress to have an effect. B) they automatically produce surpluses during recessions and deficits during inflation. C) they have no effect on the distribution of income. D) they reduce the size of the public debt during times of recession.