The advertisers' dilemma occurs in markets where:
A. advertising slightly increases the firm's sales quantity.
B. advertising greatly increases the firm's sales quantity.
C. advertising has zero impact on the firm's sales quantity.
D. advertising greatly decreases the firm's sales quantity.
Answer: A
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If the Fed wishes to increase nominal interest rates, it must engage in an open market ________ of bonds to ________ the money supply.
A. sale; increase B. sale; keep constant C. sale; decrease D. purchase; increase
Which of the following is(are) indexed to inflation?
A. Standard deduction B. Employer contributions to pensions C. Gifts and inheritances D. None of the answer options are correct.
Which of the following is not a benefit to lenders/investors of financial intermediation?
a. More diversification than the direct market. b. More convenient than the direct market. c. Higher yield than the direct market. d. All the above are benefits to lenders. e. Lower risks than the direct market.
Using a graph, explain both the substitution effect and income effect that result from an increase in the price of a normal good.
What will be an ideal response?