If the Fed decides to engage in an open market operation to increase the money supply, what will it do?
A. Sell Treasury bonds, bills, or notes on the bond market.
B. Buy Treasury bonds, bills, or notes on the bond market.
C. Increase the required reserve ratio.
D. Increase the fed funds rate.
Answer: B
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Each point on the demand curve reflects
A) all the wants of a given household. B) the highest price consumers are willing and able to pay for that particular unit of a good. C) the highest price sellers will accept for all units they are producing. D) the lowest-cost technology available to produce a good.
In Figure 13-3, demand curve CAD represents a market in which oligopolists will match the price changes of rivals and demand curve EAB represents a market in which oligopolists will ignore the price changes of rivals. According to the kinked demand model, the relevant demand curve will be
A. demand curve CAB. B. demand curve CAD. C. demand curve EAD. D. demand curve EAB.
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What will be an ideal response?
An individual derives utility from games, g (y-axis), and toy airplanes, a (x-axis), described by the utility function U(g,a) = g0.6a0.4. The price per game is $20 and the price of toy airplanes is $10. Using the slope of the income consumption curve (ICC), determine whether games and toy airplanes are normal or inferior goods when income increases from $100 to $200
A) Both goods are normal goods with an ICC slope of 3/4. B) Both goods are normal goods with an ICC slope of 4/3. C) Both goods are inferior goods with an ICC slope of -4/3. D) Both goods are inferior goods with an ICC slope of - 3/4.