The economy enters a period of robust economic growth that is expected to last for several years. How would this be reflected in the risk structure of interest rates?
A. A decrease in the term spread
B. An increase in yields on tax-exempt bonds
C. A decrease in the interest rate spread
D. An inverted yield curve
Answer: C
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Suppose the Fed forecasts a reduction in excess reserve holdings by banks. It might offset the effect of this on the money supply by
A) buying government securities. B) lowering the required reserve ratio. C) lowering the discount rate. D) selling government securities. E) a, b, and c
The California gold rush resulted in an increase in the amount of money in circulation and an increase in prices across the country
Indicate whether the statement is true or false
Market power is defined as:
(a) The ability of a perfectly competitive firm to charge any price it wants. (b) The strength of the equilibrium in the market. (c) The ability of a seller to affect the market price of a good or service. (d) All of the above.
It is possible that a firm in a perfectly competitive market earns a negative profit in the long run.
Answer the following statement true (T) or false (F)