The original Federal Reserve Act
A) specified open market operations as the Fed's main policy tool.
B) specified open market operations as one of several Fed policy tools.
C) specified that open market operations be employed by the Fed only in circumstances where discount loans were ineffective.
D) did not specifically mention open market operations.
D
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Prime Pharmaceuticals has developed a new asthma medicine, for which it has a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler
The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. With its patent giving it a monopoly for its new inhaler, if Prime Pharmaceuticals operates as a single-price monopoly, then there will be a deadweight loss equal to A) $24 million. B) zero. C) $16 million. D) $32 million.
The supply of and demand for bank reserves determines the
A) Treasury bill rate. B) prime rate. C) discount rate. D) federal funds rate.
Grocery store chains advertise more than convenience stores because:
A) the advertising elasticity of demand is smaller for grocery store chains than for convenience stores. B) convenience stores have more elastic demand for their products than grocery store chains. C) the advertising elasticity of demand for convenience stores is near zero and is much smaller than for grocery store chains. D) all of the above E) none of the above
Which of the following is false?
a. In a liquidity trap, expansionary monetary policy will tend to increase the excess reserves in the banking system. b. If there are currently excess reserves in the banking system, in a liquidity trap, expansionary monetary policy will lead those excess reserves to be lent out by the banking system c. If there are no changes in the level of excess reserves held in the banking system as a result, both expansionary and contractionary monetary policy can successfully shift the money supply curve d. None of the above; all of the above are true.