The Federal Reserve responded to the 2008 financial crisis in several ways. Which of the following is not one of the ways the Fed responded?
A) The Fed made investment banks eligible for discount loans.
B) The Fed lent investment banks Treasury securities in exchange for mortgage-backed securities.
C) The Fed lowered the required reserve ratio on demand deposit accounts in order to increase the amount of bank reserves.
D) The Fed helped JP Morgan to acquire Bear Stearns, a nearly bankrupt investment bank.
Answer: C
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When exchange rates are not determined in the market but are instead set by a country's central bank, we say that the country's exchange rate is
A) fixed. B) a real exchange rate. C) flexible. D) a nominal exchange rate.
Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as
A) the law of demand. B) the law of supply. C) ceteris paribus. D) equilibrium.
If the price of inputs rises and personal income taxes rise:
a. Aggregate demand rises, but aggregate supply does not change. b. Aggregate demand falls and aggregate supply rises. c. Aggregate demand rises and aggregate supply rises. d. Aggregate demand falls and aggregate supply falls. e. Neither the aggregate demand nor the aggregate supply change.
The players of prisoner's dilemma-type games:
A. have a dominant strategy to never cooperate. B. would be much better off if they could cooperate. C. have an incentive to never cooperate. D. All of these statements are true.