When the Fed buys government securities in the open market, it ________.
A. decreases the excess reserves of the banking system, reducing excess reserves for overnight loans in the federal funds market and thus lowering the federal funds rate
B. increases the excess reserves of the banking system, raising excess reserves for overnight loans in the federal funds market and thus lowering the federal funds rate
C. increases the excess reserves of the banking system, reducing excess reserves for overnight loans in the federal funds market and thus lowering the federal funds rate
D. decreases the excess reserves of the banking system, reducing excess reserves for overnight loans in the federal funds market and thus increasing the federal funds rate
Answer: B
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A debtor's quantity of credit demanded and the rate of interest are likely to be:
A) positively correlated. B) unrelated. C) negatively correlated. D) positively related if the rate of interest is below 10% and negatively related if it is above 10%.
If the production possibilities curve is a downward-sloping straight line, that would indicate
a. that society cannot decide which good it prefers b. an absence of scarcity c. constant opportunity cost d. inefficiency e. specialization
Which of the following transactions can be categorized as outsourcing?
a. A U.S. furniture manufacturer buying a lumber facility. b. A U.S. firm transferring some of its operations to its new subsidiary in India. c. Nike selling its sportswear to customers through its franchisees across the world. d. A U.S. cosmetics firm using an advertising agency to market its products.
Cole is refinishing an antique china cabinet and has already spent $180 on the restoration. He expects to be able to sell the cabinet for $360 . Cole discovers that he needs to do an additional $200 worth of work to make the cabinet worth $360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $100 . What should Cole do?
a. He should sell the cabinet now for $100. b. He should keep the cabinet since it wouldn't be rational to spend $380 restoring a cabinet and then sell it for only $360. c. He should complete the additional work and sell the cabinet for $360. d. It does not matter which action he takes since the outcome will be the same either way.