In order to practice quantitative easing (QE) to bring down long-term interest rates, the Fed should
A. sell short-term securities.
B. buy short-term securities.
C. buy long-term securities.
D. sell long-term securities.
Answer: C
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Two goods are substitutes if an increase in the price of one good leads to a decrease in demand for the other
Indicate whether the statement is true or false
Market income is
A) profit earned in factor markets. B) interest earned in factor markets. C) wages, interest, rent, and profit earned in factor markets. D) wages, interest, rent, and profit earned in factor markets plus cash payments made to households by government.
Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total profit is
a. $8,000. b. $12,000. c. $20,000. d. $32,000.
Friedman argued that the Fed could use monetary policy to peg
a. nominal exchange rates. b. the level of real GDP. c. the rate of unemployment. d. None of the above is correct.