Could the Fed impact the amount of borrowing in the federal funds market without changing their target for the federal funds rate? Explain.
What will be an ideal response?
Once the Fed sets a target federal funds rate, the actual quantity of funds that will be borrowed (loaned) will be determined by the demand for reserves. The Fed does not enter the market from the demand side so their impact here is really nonexistent. The fact that they will make discount loans at a rate 100 basis points above the target federal funds rate keeps a ceiling on how high the market rate will go which does impact the amount of borrowing, but this discount rate is really set once the Fed announces the target. The reality is once the Fed sets the target the demand for reserves, which they do not control, will determine the quantity of reserves that will borrowed in the federal funds market.
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Marginal cost is the opportunity cost of producing
A) every unit possible. B) zero units. C) the first unit and only the first unit. D) one more unit of a good or service. E) None of the above answers is correct.
Compared to a valued added tax, a sales tax is _____
a. easier to monitor b. easier to apply to investment goods c. harder to collect d. all of the above e. a and b
Answer the following statements true (T) or false (F)
1) The American Rule states that the plaintiff must pay their legal fees only the court rules in favor of the defendant. 2) The actual amount a plaintiff will win in a lawsuit is a random variable. 3) From an economic perspective, the decision to settle or litigate depends on actual guilt or innocence. 4) If the expected loss from litigation exceeds the expected gain, the defendant has an economic incentive to settle. 5) If the expected loss from litigation exceeds the expected gain, the defendant has an economic incentiv333) The larger a defendant's expected payment to a plaintiff, the more likely the case will be settled regardless if the expected payment is high due to the plaintiff's probability of winning, or if there is a large potential damage payment.e to settle.
In many cases, it is reasonable to refer to the ________________ as the price.
a. budget constraint b. sunk cost c. opportunity cost d. budget constraint