Everything else held constant, in the market for reserves, when the supply for federal funds intersects the reserve demand curve on the downward sloping section, decreasing the interest rate paid on excess reserves
A) increases the federal funds rate.
B) lowers the federal funds rate.
C) has no effect on the federal funds rate.
D) has an indeterminate effect on the federal funds rate.
C
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What three factors that were critical to economic prosperity did Adam Smith observe, and later publish in The Wealth of Nations?
What will be an ideal response?
A perfectly competitive market is in long-run equilibrium. At present there are 100 identical firms each producing 5,000 units of output. The prevailing market price is $20. Assume that each firm faces increasing marginal cost
Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $24. Which of the following describes the effect of this increase in demand on a typical firm in the industry? A) In the short run, the typical firm increases its output and makes an above normal profit. B) In the short run, the typical firm increases its output but its total cost also rises, resulting in no change in profit. C) In the short run, the typical firm's output remains the same but because of the higher price, its profit increases. D) In the short run, the typical firm increases its output but its total cost also rises. Hence, the effect on the firm's profit cannot be determined without more information.
Collusion is more likely to occur when
A) there is fear of punishment for not colluding. B) there is a known finite time horizon. C) there are large gains to be made by cheating on an agreement. D) the game lasts only one period.
The short-run supply curve for a perfectly competitive firm is that portion of the MC curve above the AVC curve.
Answer the following statement true (T) or false (F)