The term "open market operations" refers to the:
A. loan-making activities of commercial banks.
B. effect of expansionary monetary policy on interest rates.
C. operation of competitive markets in the banking industry as the result of deregulation.
D. buying and selling of government securities by the Federal Reserve.
Answer: D
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Recall the Application. If the decrease in price of illegal drugs is due to equal changes in demand and supply, the equilibrium quantity of drugs
A) will increase. B) will decrease. C) will not change. D) may or may not change.
To calculate the point elasticity of demand, a manager must know
A) where the supply curve intersects the demand curve. B) two points on the demand curve. C) information about the entire demand curve. D) whether or not the demand curve is linear.
Labor and land are substitutes. If rent goes up and the amount of labor used goes down, we can assume that the
A. output effect outweighed the substitution effect. B. the substitution effect outweighed the output effect. C. the substitution effect and the output effect canceled each other out. D. there is no way to determine the relative weights of the substitution effect and the output effect.
A tariff differs from a quota in that a tariff is:
A. levied on imports, whereas a quota is imposed on exports. B. levied on exports, whereas a quota is imposed on imports. C. a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. D. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.