(Last Word) Which of the following has to do with the problem of distinguishing cause and effect in economic reasoning?
A. The law of large numbers.
B. The law of averages.
C. The post hoc, ergo propter hoc fallacy.
D. The fallacy of composition.
Answer: C
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By using open market operations, the Federal Reserve
A) adjusts the supply of reserves to keep the federal funds interest rate equal to its target. B) controls banks' demand for reserves, thereby keeping the federal funds rate equal to its target. C) adjusts the demand of reserves to keep bank rates in line with the federal funds rate target. D) adjusts the supply and demand of reserves to keep the federal funds interest rate equal to its target. E) None of the above answers is correct.
The Fed has immense power and there are no limits to the extent to which it can effectively control the economy.
Answer the following statement true (T) or false (F)
Suppose an industry has total sales of $25 million per year. The two largest firms have sales of $6 million each, the third largest firm has sales of $2 million, and the fourth largest firm has sales of $1 million. The four-firm concentration ratio for this industry is
A. 60 percent. B. 36 percent. C. 25 percent. D. 50 percent.
Given PUS and YUS
A) An increase in the European money supply causes the euro to appreciate against the dollar, but it does not disturb the U.S. money market equilibrium. B) An increase in the European money supply causes the euro to appreciate against the dollar, and it creates excess demand for dollars in the U.S. money market. C) An increase in the European money supply causes the euro to depreciate against the dollar, and it creates excess demand for dollars in the U.S. money market. D) An increase in the European money supply causes the euro to depreciate against the dollar, but it does not disturb the U.S. money market equilibrium. E) An increase in the European money supply causes the euro to depreciate against the dollar, and disturbing the U.S. money market equilibrium.