Which of the following is an example of unconventional monetary policy?
a. the Federal Reserve selling T-bills
b. the Federal Reserve decreasing the discount rate
c. the Federal Reserve purchasing mortgage-backed securities
d. none of the above
c
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A perfectly competitive market has demand Q = 100 - P and supply Q = P - 10. An individual firm has MC = 10 + 2Q.
(a) What is the market equilibrium price and quantity? (b) How much output should the individual firm produce? (c) Although it is has been claimed that this market is perfectly competitive, do your answers to parts (a) and (b) suggest differently?
The ability of a commercial bank to increase the money supply is limited by the
A) availability of eligible borrowers and the bank's reserves in relation to legal reserve requirements. B) demand of the public for liquidity. C) eligibility of the bank for currency drafts and its ratio of M2 to M1. D) willingness of customers to withdraw currency for circulation.
When interest rates are artificially lowered through expansionary monetary policy,
A) longer-term investment projects appear to be more profitable. B) production of capital goods increases. C) the economy experiences an unsustainable boom phase. D) the economy will likely fall into a recession in the longer run. E) all of the above tend to occur.
Why do you suppose that South-South trade does not conform in volume, but does conform in pattern with expectations generated by the Heckscher-Ohlin model?
What will be an ideal response?