What is the Term Auction Facility?
The Term Auction Facility is the market created by the Fed where eligible banks bid on the rates they are willing to pay to borrow funds. In this way, the rate to borrow is determined competitively by banks rather than set explicitly by the Fed.
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Answer the following statements true (T) or false (F)
1. If the price that a firm charges is higher than its average cost of production for that quantity produced, then the firm will earn profits. Conversely, if the price that a firm charges is lower than its average cost of production, the firm will suffer losses. 2. When a firm earns losses because it does not make enough revenue to offset the increased variable costs plus fixed costs, it should remain open in the short run. 3. For a constant cost industry, whenever there is an increase in market demand and price, the supply curve shifts to the right with new firms’ entry and stops at the point where the new long-run equilibrium intersects at the same market price as before. 4. The fact that perfectly competitive markets are the most usual type of market supports the statement that, in the long run, markets will feature both productive and allocative efficiency. 5. A natural monopoly occurs when a company has control of a scarce physical resource.
The purchase of foreign shares and bonds by an Australian brokerage firm is an example of capital inflows to Australia.
Indicate whether the statement is true or false.
During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities. The result of this legislation was
A. a large increase in the availability of those items, ending shortages. B. a severe shortage of those essential commodities. C. an increase in the price of those items, thus alleviating shortages. D. new efforts to increase production of those commodities. E. a minor inconvenience as persons adjusted to the new law.
When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all
a. rely upon the government to provide us with the basic necessities of life. b. rely upon one another for the goods and services we consume. c. have similar tastes and abilities. d. are concerned about one another's well-being.