To contract the money supply, the Fed should
A. increase government spending and cut taxes.
B. lower the required reserve ratio.
C. sell U.S. government securities.
D. reduce the differential between the discount rate and the federal funds rate.
Answer: C
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In the figure above, illustrates the effect of an increased rate of money supply growth at time period 0. From the figure, one can conclude that the
A) liquidity effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. B) liquidity effect is larger than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. C) liquidity effect is larger than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. D) liquidity effect is smaller than the expected inflation effect and interest rates adjust slowly to changes in expected inflation.
If the price of a good doubles and quantity supplied triples, then
a. demand is elastic b. demand is inelastic c. supply is inelastic d. supply is elastic e. there is insufficient information to reach any conclusion about the price elasticity of supply
Recall the Added Perspective on the prisoner's dilemma. When there is a prisoner's dilemma,
a. the prisoners stick to a joint strategy b. each prisoner's best strategy is not to confess c. the prisoners must make a once-and-for-all decision d. game theory does not apply e. there is no mutual interdependence
Define the term "property rights." Explain why the lack of well-defined and enforceable property rights is detrimental to the smooth functioning of a market system
What will be an ideal response?