Refer to the above figure. Which panels could represent the situation if the Fed had engaged in open market operations?
A. Panels A and B
B. Panels A and C
C. Panels B and C
D. Panels C and D
Answer: A
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The difference between the risk-free rate and the interest rate a particular investor has to pay is called the:
A. credit spread. B. risk premium. C. Both of these are true. D. Neither of these is true.
Refer to the accompanying figure. Suppose the solid line represents the current supply of Star Wars action figures. If retailers learn that a new Star Wars movie will be released in several months, this news is likely to cause:
A. a decrease in the quantity supplied, but no change in current supply. B. current supply to shift to S(B) in anticipation of higher future prices. C. neither a change in supply nor a change in quantity supplied since only future demand will change. D. current supply to shift to S(A) in anticipation of higher future prices.
Public goods are unlikely to be provided by the private sector because
A) the production of the good creates negative externalities. B) no one can be excluded from the consumption of the good. C) the consumption of the good creates negative externalities. D) the exclusion principle does not apply to public goods.
The efficient quantity of a public good is the quantity that has the highest possible marginal social benefit
Indicate whether the statement is true or false