As financial markets develop new and complex financial instruments, the Fed has:
A. less control over the long-term interest rate.
B. no control over the short-term interest rate.
C. full control over the short-term interest rate.
D. more control over the long-term interest rate.
Answer: A
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When an individual's wage rises, the income effect tends to:
a. increase hours worked. b. decrease hours worked. c. leave hours worked unchanged. d. an impossible prediction about what will happen to hours worked.
Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford Mustang: $20,000 . The dealer says, "You're in luck; we have one on the lot for $20,000." Which of the following statements is true?
a. Ferd will not buy the car. b. The car is not worth $20,000. c. Ferd gets $20,000 in consumer surplus. d. Ferd gets no consumer surplus. e. The dealer earns $20,000 in consumer surplus.
Health care costs have been increasing dramatically in the U.S.
A. True B. False C. Uncertain
Which of the following is not correct?
a. The demand curve facing a competitive firm is perfectly elastic. b. The demand curve facing a monopolist is the market demand curve. c. A monopolist can charge any price and sell any quantity that it chooses. d. A monopolist can alter the market price by adjusting the quantity that it produces.