If the Fed lowers the federal funds rate, eventually the
A) AS curve shifts rightward, decreasing real GDP and raising the price level.
B) AS curve shifts leftward, decreasing real GDP and raising the price level.
C) AD curve shifts leftward, decreasing real GDP and raising the price level.
D) AD curve shifts leftward, decreasing real GDP and lowering the price level.
E) AD curve shifts rightward, increasing real GDP and raising the price level.
E
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Answer the following statements true (T) or false (F)
1. If a nation has an absolute advantage over another nation in the production of all commodities, it is not feasible to take advantage of the principle of comparative advantage. 2. Comparative advantage cannot be applied to activities of individuals. 3. Overspecialization and the resulting dependence on one or a few products by a nation can lead to severe economic fluctuations if demand for those products varies widely. 4. In exercising the principle of comparative advantage, a nation with no absolute advantage should produce a commodity in which it faces a lower opportunity cost than its trading partners face. 5. In the long run, a nation cannot overcome a shortage of labor or land. 6. Increasing opportunity costs occur along the production possibilities curve because not all resources are alike in producing different goods.
A commercial bank's ability to lend is determined by its
A) required reserves. B) excess reserves. C) total reserves. D) capital.
When people hold financial assets in the form of money, they:
A. reduce their financial assets. B. forgo interest payments. C. earn income in the form of interest rate. D. pay interest rates.
Refer to Scenario 9.3 below to answer the question(s) that follow. SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Refer to Scenario 9.3. Total fixed costs per week are
A. $1,000. B. $2,000. C. $3,000. D. $4,500.