Banks can borrow reserves from each other through:
A. open market purchases.
B. secondary reserves.
C. the Fed funds market.
D. the Federal Open Market Committee.
Answer: C
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Use the following graph to answer the next question.
The relationship between the average tax rate and the tax base in a proportional tax would be represented by
A. curve A. B. curve B. C. curve C. D. none of the curves.
________ is defined as a sustained ________ in the price level
A) Inflation; fall B) Deflation; fall C) Deflation; rise D) Answers A and C above are both true.
Financial innovation is
A) the process of turning assets into a more liquid form. B) the development of new financial products and services. C) responsible for credit cards being included as part of money. D) causing a decrease in bank profits.
Suppose that an MBA degree creates no externality because the benefits of an MBA are captured by the student in the form of higher wages. If the government offers subsidies for MBAs, then which of the following statements is correct?
a. The equilibrium quantity of MBAs will equal the efficient quantity of MBAs. b. The equilibrium quantity of MBAs will be greater than the efficient quantity of MBAs. c. The equilibrium quantity of MBAs will be less than the efficient quantity of MBAs. d. The tuition paid by the student would be exceed the efficient amount.