Answer the following statements true (T) or false (F)
1. More than 50 percent of commercial banks in the United States belong to the Federal Reserve System.
2. If the Fed desires to increase check able deposits, it may lower the reserve requirement.
3. If the Fed desires to expand the money supply, it will raise the discount rate.
4. By buying government securities, the Federal Open Market Committee adds to member banks’ reserves.
5. The greater the level of excess reserves, the lower the Federal Funds rate will be.
1. FALSE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
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If the Fed carries out an open market operation and sells U.S. government securities, the federal funds rate ________ and the quantity of reserves ________
A) falls; decreases B) rises; increases C) rises; decreases D) rises; does not change E) falls; increases
If a perfectly competitive firm's price is less than its average total cost but greater than its average variable cost, the firm
A) is earning a profit. B) is incurring a loss. C) should shut down. D) is breaking even.
The sub-discipline of economics that focuses especially on individual markets is:
a. normative economics. b. positive economics. c. microeconomics. d. macroeconomics. e. econometrics.
Consider a firm with one fixed cost, rent, and one variable cost, wages. Describe the effects of an increase of this firm's rent