When the Federal Reserve Banks decide to buy government bonds from banks and the public, the supply of reserves in the federal funds market ________.
A. increases and the federal funds rate increases
B. decreases and the federal funds rate decreases
C. increases and the federal funds rate decreases
D. decreases and the federal funds rate increases
Answer: C
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In reality, the long-run supply curve for a perfectly competitive market is upward sloping because:
A. of changing costs of production that firms may face. B. not all firms have identical cost structures. C. experienced firms will have different information and costs than new firms. D. All of these are true.
The largest part of gross domestic product in the United States is
a. investment. b. consumption. c. government expenditure. d. trade balance.
For this question, assume that there is a simultaneous tax increase and monetary expansion. In a flexible exchange rate regime, we know with certainty that
A) the exchange rate and output would both increase. B) the exchange rate would increase and output would decrease. C) the exchange rate would decrease. D) the exchange rate would decrease and output would increase. E) none of the above
Graphically, economies to scale are illustrated by
A) a downward sloping long-run average cost curve. B) a horizontal long-run average cost curve. C) an upward sloping long-run average cost curve. D) a long-run average cost curve that is shaped like an upside down U.