The Fed raises the federal funds rate when it
A) fears inflation.
B) wants to increase the quantity of money.
C) fears recession.
D) wants to encourage bank lending.
E) cannot change the quantity of money.
A
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All of the following are true regarding moral hazard except which one?
A) It arises when parties to a transaction have conflicting objectives and the supervising parties cannot monitor the other parties. B) It typically occurs after participants have already entered into a contract or agreement. C) It is a situation in which individuals make hidden actions that benefit them at the expense of the other parties. D) Situations of moral hazard tend to be rare occurrences.
Refer to Figure 4.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, what is the market quantity demanded at a price of $3?
A) 6
B) 9
C) 15
D) 20
If Justine's money wages tripled from 2015 to 2020 and the consumer price index tripled, we would know that Justine's real wages
A. fell substantially. B. fell slightly. C. stayed the same. D. rose slightly.
Consider two firms competing to sell a homogeneous product by setting price. The inverse demand curve is given by P = 6 ? Q. If each firm's cost function is Ci(Qi) = 2Qi, then consumer surplus in this market is:
A. $2. B. $8. C. $4. D. There is insufficient information to determine consumer surplus in this market.