Outline the policy choices for contractionary and expansionary options of the Fed
In the case of persistent, high inflation, the Fed would pursue a contractionary policy. To decrease the money supply it would sell bonds, raise the discount rate, raise the reserve requirement, and increase the interest rate paid on reserves. If the Fed wanted to pursue an expansionary policy because of a severe recession, it would increase the money supply by buying bonds, lowering the reserve requirements, lowering the discount rate, and lowering the interest rate paid on reserves.
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If an industry has a four-firm concentration ratio equal to one hundred percent, then it is definitely the case that the industry is
A) a monopoly. B) perfectly competitive. C) monopolistically competitive. D) either a monopoly or an oligopoly.
The CEO and stockholders are not necessarily the same people. This gives rise to
A) upstream and downstream contracts. B) a principal-agent problem. C) complete contracts. D) a control over moral hazard.
Which of the following cost functions exhibits cost complementarity?
A. 4Q2Q1 + 8Q1. B. ?4Q1Q2 + 8Q1. C. ?4Q2 + 8Q1. D. 6Q1Q2 ? Q1.
You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:
A. there is an excess supply of teachers in other districts. B. the wage for teachers in that district is higher than the wage in other districts. C. the wage for teachers in that district is lower than the equilibrium wage. D. the demand for teachers in the inner-city school district is too low.