If a $1 million open market purchase by the Fed generates a new deposit at a bank that immediately causes the bank's reserves held at the Fed to increase by $1 million, then the T-account effects are that the bank's assets and liabilities ________ by $1 million and that the Fed's assets and liabilities ________ by $1 million.
A. increase; increase
B. increase; decline
C. decline; decline
D. decline; increase
Answer: A
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Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 cents per page, what is Fast Copy's profit maximizing level of output?
A) 16 pages per hour B) 32 pages per hour C) 48 pages per hour D) 64 pages per hour
If firms in a competitive market have different cost functions, then
A) there is no short run market supply curve. B) the market supply curve reflects those firms' operating envelopes, even in the short run. C) some of the firms will shut down because their costs are too high to compete. D) the firms' marginal costs will be different at the market price.
Refer to Scenario 17.3. Moral hazard would be eliminated in this situation if
A) the insurer would always charge $300. B) the insurer would always charge $6000. C) the insurer could costlessly monitor whether a fire prevention program has been implemented, and adjust the premium upward if it is not. D) the insurer could costlessly monitor whether a fire prevention program has been implemented, and adjust the premium downward if it is not. E) the fire did not occur.
The optimal bidding strategy for an oral auction is
a. To shade your bid below your true value and drop out well before it is reached b. To shade your bid below your true value and drop out just when the shaded amount is reached c. To bid drop out when the bidding exceeds your true value d. To size up your competition to determine how much to shade your bid