The figure above shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market purchase of government securities that changes the quantity of reserves by $25 billion, then the federal funds rate will
A) fall to 4 percent a year.
B) remain at 6 percent a year.
C) rise to 8 percent a year.
D) change, but more information is needed to determine by how much.
E) None of the above answers is correct.
Answer: A) fall to 4 percent a year.
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The United States is considered by the Institute for Management Development to be the most competitive economy because
A) U.S. residents are willing to work harder than anyone else is. B) of widespread entrepreneurship. C) of a high saving rate. D) of selected restrictions on imports from Japan and Europe.
If a competitive firm is operating at its efficient scale, then is the firm's profit positive, zero, or negative?
When most people talk about believing in equality of income, they mean they believe in equality of:
A. after-tax income for comparably endowed individuals. B. before-tax income for comparably endowed individuals. C. effort for comparably endowed individuals. D. opportunity for comparably endowed individuals.
In the above figure, if the firm is producing at Q3 and charging a price of P3, it should
A. increase output and decrease price. B. decrease output and increase price. C. not change output or price. D. shut down.