Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The Fed's balance sheet will show:
A. an increase in the asset category of securities and the liability category of reserves by $2 billion.
B. only an increase in the asset of securities of $2 billion.
C. no change in the size of the balance sheet, just the composition of assets will change from cash to securities.
D. only show an increase in the liability of reserves of $2 billion.
Answer: A
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In finance, leverage is using:
A. borrowed money to pay for investments. B. the equity one owns to pay for investments planned in the future. C. predicted earnings to pay for current investments. D. forecasted future earnings to pay for current loans.
Suppose Trust Bank purchases government bonds worth $55 million. If the bank does not want to reduce its reserves, _____
a. it should start giving more loans b. it should stop giving new loans c. it should raise the discount rate d. it should lower the minimum required ratio
If demand is more elastic, the portion of an excise tax borne by a buyer will
A. increase. B. decrease. C. be unchanged. D. increase for normal goods, decrease for inferior goods.
Answer the following statement(s) true (T) or false (F)
1. A firm that has not shut down in the short run will not shut down in response to a decrease in the marginal costs. 2. For prices greater than the minimum value of average variable cost, the firm's short-run supply curve coincides with its short-run marginal cost curve. 3. Given two supply curves passing through the same point, the flatter one has the higher elasticity. 4. Industry's supply curves tend to be less elastic than the supply curves of individual firms. 5. The elasticity of supply is positive because prices and quantities are always positive.