Refer to the table, in which investment is in billions. Suppose the Fed reduces the interest rate from 6 to 5 percent at a time when the investment demand declines from that shown by columns (1) and (2) to that shown by columns (1) and (3). As a result of these two occurrences, investment will:
A. increase by $10 billion.
B. decrease by $10 billion.
C. increase by $20 billion.
D. decrease by $20 billion.
B. decrease by $10 billion.
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If the required reserve ratio is 20 percent, banks loan out all excess reserves, people hold no currency, and the Fed sells $5,000 worth of bonds to banks, what is the ultimate impact on the money supply?
a. The money supply will increase by $5,000. b. The money supply will decrease by $5,000. c. The money supply will increase by $25,000. d. The money supply will decrease by $25,000. e. The money supply will not change.
One characteristic of an oligopoly market structure is:
a. firms in the industry are typically characterized by very diverse product lines. b. firms in the industry have some degree of market power. c. products typically sell at a price equal to their marginal cost of production. d. the actions of one seller have no impact on the profitability of other sellers.
Productivity is a measure of
A. Input per dollar of output. B. Output per unit of input. C. Input per unit of output. D. Output per dollar of input.
A distinguishing characteristic of producers of information products is their
A) high social cost. B) short-run economies of operation. C) low average fixed costs. D) low fixed costs.