If the Federal Reserve unexpectedly decides to sell bonds, which of the following will most likely happen in the short run?
a. The demand for loanable funds will increase, which will exert upward pressure on the interest rate.
b. The supply of loanable funds will decrease, which will exert upward pressure on the interest rate.
c. The supply of loanable funds will increase, which will exert downward pressure on the interest rate.
d. The natural rate of unemployment will increase.
B
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Amanda is from Vermont and visiting California for the first time. At home, Amanda always goes jogging early in the morning because it's hottest in the early afternoon. Not knowing what to expect of the weather in California, she decides to go jogging in the early morning during her visit. This decision is an example of:
A. loss aversion. B. status quo bias. C. a heuristic. D. positive framing.
Professor Cowen's objection to fiscal policy spending by government is:
A. the government may rush to start stimulus spending and not spend money in the most effective way possible. B. the government may put too much thought into the spending projects and confuse stimulus spending with industrial policy. C. households and businesses might realize that the boost in spending is from the government and simply save the income they receive. D. the government may not have enough money available to do an appropriate amount of spending.
Suppose that the price of telephones decreases. If more are purchased then:
A. the total utility of telephones will decrease. B. the total utility of telephones will be unchanged. C. the marginal utility of telephones will likely increase. D. the marginal utility of telephones will likely decrease.
Based on Table 3.1, if the world price of computers is four pairs of shoes, then the optimal strategy for each country would be
A) to specialize in shoes. B) to specialize in computers. C) for Mexico to specialize in shoes, and the United States in computers. D) for the United States to specialize in shoes, and Mexico in computers. E) None of the above.