The fact that, for most of its history, the Fed was reluctant to make discount loans actually:
A. pushed the discount rate above the target federal funds rate.
B. at times was a destabilizing force for financial markets.
C. proved to be a very stabilizing force for financial markets.
D. resulted in banks in very strong financial shape as being the only ones borrowing from the Fed.
Answer: B
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Refer to Figure 26-3. In the figure above, when the money supply shifts from MS1 to MS2, at the interest rate of 3 percent households and firms will
A) sell Treasury bills. B) neither buy nor sell Treasury bills. C) want to hold more money. D) buy Treasury bills.
In monopolistic competition, the end result of entry and exit is that firms end up with a price that lies on the downward-sloping portion of the average cost (AC) curve, not at the very bottom of the AC curve. This means that monopolistic competition will:
a. be productively efficient. b. display allocative efficiency, but only in the short run. c. not be productively efficient. d. display allocative efficiency, but only in the long run.
At the end of the day, Gracia's Pizza looks into the cash register to count up the day's total revenue. Another way of calculating its total revenue would be to find
a. price × average revenue b. price × marginal revenue c. price × quantity d. marginal revenue × average revenue e. marginal revenue × marginal cost
A car salesperson gives you four alternative ways to pay for your car. The first is to pay $18,000 today. The second is to pay $19,000 one year from today. The third is to pay $20,300 two years from today. The fourth is to pay $21,500 three years from today. If the interest rate is 6 percent, which payment option has the lowest present value and which has the highest?
a. The first is lowest; the second is highest. b. The second is lowest; the third is highest. c. The third is lowest; the fourth is highest. d. The fourth is lowest; the first is highest.