In response to the financial crisis in 2008, the Fed created which of the following policy tools?
A) quantitative easing
B) the required reserve ratio
C) the discount rate
D) the federal funds rate
E) open market operations
A
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What is the main reason the Fed operates in a political arena?
A) It lacks a constitutional mandate. B) The members of the Board of Governors must run for reelection every fourteen years. C) The members of the Board of Governors are typically prominent politicians. D) It is under the direct control of Congress.
Professor's economics students are constructing models for how gasoline prices change. Maria's model has very realistic assumptions and is quite complex. Anna's model is less complicated and less realistic
Maria's model correctly predicts gas price increases 5% of the time. Anna's model predicts correctly 15% of the time. On the basis of usefulness or "goodness," Professor will give which student's model the higher grade and why? A) Maria's model gets the higher grade because it is more complex. B) Anna's model gets the higher grade because it is simpler. C) Maria's model gets the higher grade because it is more realistic. D) Anna's model gets the higher grade because it predicts accurately more often.
Which of the following will occur if a natural monopoly is broken into two smaller firms?
A. The price will drop. B. Industry output will increase. C. Production costs will increase. D. Industry output will decrease.
Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 36 and WR = 25 and the probability of drought is 0.75. Expected water consumption is:
A. 33.25 units of water. B. 61 units of water. C. 30.5 units of water. D. 27 units of water.