Which of the following statements is most correct if the Fed sees no need to engage in expansionary monetary policy?
A. It will be impossible for the Fed to shrink its balance sheet.
B. Eventually, the Fed will shrink its balance sheet by letting securities it holds expire.
C. The Fed is likely to increase the size of its balance sheet.
D. The Fed will likely shrink its balance sheet rapidly.
Answer: B
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The Wong family consumes 3 pounds of fish and 5 pounds of chicken per month. The price of fish is $8 per pound and chicken is $4 per pound
a. What is the amount of income allocated to fish and chicken consumption? b. What is the price ratio (the price of fish relative to the price of chicken)? c. Explain the meaning of the price ratio you computed. d. If the Wongs maximize utility, what must the ratio of the marginal utility of fish to the marginal utility of chicken be equal to? e. If the price of chicken rises, will the Wong family consume more chicken, less chicken, or the same amount of chicken? Explain your answer using the rule of equal marginal utility per dollar.
An example of moral hazard is
a. A taxi driver paid per mile taking a longer route than necessary b. a piece-rate garment worker shirking more than a per hour worker c. an hourly salesman working harder than a commission salesman d. an author on contract going to as many book signings as one with a percentage royalty rate
According to the Latin phrase ceteris paribus:
a) Nothing else changes. b) Things do not remain equal. c) Resources are limited. d) There is no government intervention.
Income inequality tends to be greatest in
A. Poorest countries. B. Richest countries. C. Middle-income countries. D. None of the choices are correct.