Suppose on any given day there is an excess demand of reserves in the federal funds market
If the Federal Reserve wishes to keep the federal funds rate at its current level, then the appropriate action for the Federal Reserve to take is a ________ open market ________, everything else held constant. A) defensive; sale
B) defensive; purchase
C) dynamic; sale
D) dynamic; purchase
B
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With respect to labor supply, the substitution effect takes account of the point that at higher wage rates
A) a person can afford to take more leisure. B) leisure has become less expensive and so a person consumes less leisure. C) there are no factors inducing a person to work less. D) leisure has become more expensive and so a person consumes less leisure.
The underground economy — the informal sector — can be a significant drag on the economies of developing countries. Why are firms in the informal sector often less efficient than firms in the formal sector?
What will be an ideal response?
Refer to the above table. Based on the information in the table, we can say that
A) all three goods are substitutes for each other. B) all three goods are complements. C) X and Y are substitutes, Y and Z are complements, and X and Z are substitutes. D) X and Y are complements, Y and Z are substitutes, and X and Z are complements.
The theory that nominal exchange rates are determined so that the law of one price holds is called:
A. the fixed-exchange-rate rule. B. purchasing power parity. C. the law of supply and demand. D. the equilibrium principle.