What does it mean for the Fed to be the "lender of last resort?"
When banks can not borrow in the market place, the Fed stands ready to loan reserves to banks. By doing so, the Fed can ensure the stability of the banking sector during temporary episodes when a bank does not have the amount of required reserves.
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A good measure of the standard of living is
A) total real GDP. B) real GDP per capita. C) total nominal GDP. D) nominal GDP per capita.
Regulations that strictly limit pollution
A. provide firms no incentives to reduce pollution once a standard is met. B. provide no incentives for firms to discover loopholes in the regulations. C. tend to be an economically efficient way to reduce pollution. D. has been a simple way for some firms to reduce pollution to zero.
Answer the following statement true (T) or false (F)
1) The consumer demand curve for a product is downsloping because marginal utility is constant when price declines. 2) The income effect explains an exception to the law of demand. 3) The substitution effect suggests that when consumers judge product quality by price, they will substitute high-priced products for low-priced products. 4) Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease