What happens when the Federal Reserve purchases U.S. government bonds?
A) Interest rates rise because bonds become scarcer.
B) Commercial bank reserves increase.
C) The national debt declines in size.
D) The growth rate of the money stock falls.
E) All of the above occur.
B
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The major drawback of a price ceiling is
A. it causes a surplus. B. government regulations of this kind are difficult to enforce. C. it causes a shortage. D. there is no drawback.
Assume that you are a plaintiff and have won a structured settlement from a lawsuit that entitles you to $1 million each year over the next ten years
An attorney from the defense team approaches you afterward and offers you $6 million in exchange for your settlement. How would you go about evaluating whether this is a good deal for you or not?
If expectations are formed adaptively, then people
A) use more information than just past data on a single variable to form their expectations of that variable. B) often change their expectations quickly when faced with new information. C) use only the information from past data on a single variable to form their expectations of that variable. D) never change their expectations once they have been made.
The California cigarette market consists of the following supply and demand curves:
QD = 150 - 20p QS = 40p where Q is the number of packs of cigarettes per year (in millions!), and p is the price per pack. a. Compute the market equilibrium price and quantity. b. Calculate the price elasticities of each curve at the equilibrium price/quantity. c. California imposes a tax on cigarettes of $0.90 per pack. Suppliers pay this tax to the government. Compute the after-tax price and quantity. How much do suppliers receive net of tax (per pack)? d. Demand for cigarettes is generally more elastic over longer periods of time as consumers have more time to kick the habit. What does this imply about the tax incidence in the long run as compared to the short run?