When the Federal Reserve seeks to raise the targeted federal funds rate, it ________.
A. sells government securities to increase the excess reserves available for overnight loans
B. sells government securities to decrease the excess reserves available for overnight loans
C. buys government securities to increase the excess reserves available for overnight loans
D. buys government securities to decrease the excess reserves available for overnight loans
Answer: B
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Refer to the Article Summary. Assuming the findings are correct and all else equal, people who do not shop at Trader Joe's can still benefit from living near the store, as is shown by the higher home values. As a result, the marginal social benefit from living near a Trader Joe's is ________ the marginal private benefit to those who shop at Trader Joe's.
A) less than B) equal to C) greater than D) unrelated to
Refer to the figure above. If this were a voluntary restraint agreement, the welfare costs to the importing country would be
A) $14,000. B) $18,000. C) $38,000. D) $60,000.
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the
Three-Sector-Model? a. The GDP Price Index rises, and nominal value of the domestic currency falls. b. The GDP Price Index falls, and nominal value of the domestic currency rises. c. The GDP Price Index rises, and nominal value of the domestic currency remains the same. d. The GDP Price Index falls, and nominal value of the domestic currency falls. e. There is not enough information to determine what happens to these two macroeconomic variables.
Policy makers often use taxes and subsidies to address market failure in medical care. A good example of this policy is the tax exemption to encourage employers to offer insurance to their workers. Which statement is true about this tax policy?
a. The policy encourages employees to purchase the amount of insurance they would choose to buy without the incentive. b. The policy has resulted in employees demanding more than the optimal level of insurance coverage. c. The policy has led to the market providing the optimal level of medical care. d. The policy provides conclusive evidence that government action improves market outcomes. e. The policy had little effect on the expansion of employer-sponsored insurance.