A banking panic is an episode in which:
A. commercial banks, concerned about high interest rates, rush to borrow at the Federal Reserve discount rate.
B. commercial banks, fearing Federal Reserve sanctions, unwillingly participate in open-market operations.
C. depositors, afraid of increasing interest rates, attempt to engage in discount-window borrowing at the Federal Reserve.
D. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system.
Answer: D
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A firm can maximize profits in the short run by producing output where
a. MC = MR and the MC curve crosses the MR curve from above (as long as P>AVC) b. TC = TR c. MR - MC = TR - TC d. MC = MR and the MC curve crosses the MR curve from below (as long as P>AVC) e. TR = TC and the TC curve crosses the TR curve from below
If imports = 500 billion euros, exports = 700 billion euros, purchases of domestic assets by foreign residents = 600 billion euros, and purchases of foreign assets by domestic residents = 800 billion euros, what is the quantity of euros demanded in the market for foreign-currency exchange?
a. 1,100 billion euros b. 600 billion euros c. 500 billion euros d. 200 billion euros
A monopolist responds to an increase in marginal cost by _____ price and _____ output.
A. increasing; decreasing B. decreasing; decreasing C. decreasing; increasing D. increasing; increasing
Which of the following is considered a key economic influence on the capacity of market economies to promote unprecedented growth?
A) political changes B) religious beliefs C) historical accidents D) free competition