As the Fed shifted to a highly expansionary monetary policy during the second half of 2008, why were banks reluctant to extend loans and make investments?
a. Banks did not have enough excess reserves to extend loans and make investments.
b. The demand for loans was weak and the business climate was uncertain.
c. The rate of return on short-term investments was high, so banks were reluctant to make long-term investments.
d. The interest rate that the Fed pays on excess reserves was maintained at a high rate.
B
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When Ukraine trades with Italy,
a. both countries are likely made better off. b. only Italy benefits since Ukraine can produce all goods at a higher level of quality than Italy. c. only Ukraine benefits since Italy's low wages guarantee that Italian firms will be profitable regardless of trade. d. neither country will benefit since Ukraine is more efficient than Italy in the production of all goods.
When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is
a. $11. b. $22. c. $33. d. $44.
There has been much discussion over whether marijuana should be legalized. Assume that if it becomes legal the price will be cut in half. Given your text estimate of -1.0 price elasticity for marijuana, what would you expect to be the change in marijuana usage?
A. It will double. B. It will not change. C. It will be cut in half. D. It will increase by 50%.
Which of the following characteristics would describe a product with an elastic demand?
A. The good has many different uses and many substitutes for the product exist. B. The good has relatively few uses and few substitutes for the product exist. C. The good is considered a luxury and few substitutes for the product exist. D. The good has many different uses and the price of the product is low relative to the buyer's income.