The essential functions of any central bank are:
A. preventing the formulation of monopolies or other market failure, and acting as a lender of last resort.
B. managing the money supply, and acting as a lender of last resort.
C. overseeing major business transactions, and managing the money supply.
D. collecting taxes, and managing the supply of money.
Answer: B
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Elimination of riskless profit opportunities in the futures market is
A) hedging. B) arbitrage. C) speculation. D) underwriting.
Economic interactions with others are necessary because
A. Resources are limited. B. People are lazy. C. Advertising makes us want additional goods and services. D. Some people are rich and others are poor.
If the nominal interest rate 8% and expected inflation 3%, the expected real interest rate in year t is approximately
A) 2%. B) 3%. C) 5%. D) 8%. E) 11%.
Environmental Protection Agency (EPA) regulations tend to go through many stages of review and approval before they are implemented. Not only do many regulators have to approve a new regulation, but comments and reviews from industry and conservation organizations are typical. Explain these complicated procedures in light of the theories of supply and demand for regulation.
What will be an ideal response?