If a savings and loan "pools risk," which of the following must it do?
A) take funds in from a large number of lenders
B) have a large spread between the interest rate it charges borrowers and the interest rate it pays lenders
C) lend money to a large number of firms
D) Both answers A and C are correct.
D
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Which oligopoly model results in firms successively undercutting their rivals' prices until the competitive outcome is reached?
a. The contestable market model. b. The Cournot model of oligopoly. c. The Bertrand model of oligopoly. d. The monopolistic competition model.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
An optimum that occurs as a corner solution
A) includes only one good. B) cannot be an equilibrium. C) cannot exhaust the budget constraint. D) includes the exact same amounts of each good.
An open market sale of T-bonds by the Fed causes the money supply to
a. fall and bond prices to fall. b. rise and bond prices to fall. c. rise and bond prices to rise. d. fall and bond prices to rise.