Refer to Figure 8-4. Based on these graphs, what is the total quantity of loanable funds
demanded at an interest rate of 5 percent?
a. $0.8 trillion
b. $1.0 trillion
c. $1.4 trillion
d. $1.8 trillion
e. $2.2 trillion
In order for a market to be classified as an oligopoly,
The characteristics of a market that influence the behavior of market participants is
(are) known as
Even if the Fed attempts to control an asset bubble by raising interest rates to any
reasonable degree, it is not clear that overly-optimistic investors would respond.
If there is a decrease in world oil prices and the Fed wishes to maintain output stability,
what should it do?
a. Buy bonds in the open market.
b. All the economy to adjust itself.
c. Sell bonds in the open market.
d. Impose higher taxes to counteract the supply shock.
e. Lower taxes to maintain output.
The chairman of the Board of Governors of the Federal Reserve System is appointed by
the Senate and approved by the President.
If political influences, independent of any economic forces, lead to a larger government
budget deficit, what will be the effect on the loanable funds market?
a. The interest rate will rise and the amount of saving will increase.
b. The interest rate will fall and the amount of saving will increase.
c. The interest rate will rise and the amount of saving will decrease.
d. The interest rate will fall and the amount of saving will decrease.
e. The interest rate will rise but the change in saving will be ambiguous.
Which of the following represent the Federal Reserve’s most important responsibilities?
a. Supervise and regulate banks.
b. Issuing paper currency.
c. Printing paper currency.
d. Both (a) and (b)
e. Deciding the maximum rate banks can charge for loans.
The Federal Reserve has been quite consistently successful in keeping the inflation rate
low over its entire history.
The monopoly that does not practice price discrimination
During a recession, a rising unemployment rate is
a. rare
b. stimulating higher levels of inflation
c. predicted by the classical model
d. the basis for a new economic expansion
e. almost inevitable
Which of the following would be classified as a government purchase?
a. Social security payments
b. Government purchases of computers
c. Unemployment insurance payments
d. Welfare payments
e. Veterans’ Administration payments.
Using the information in Figure 2-11, Jill’s opportunity cost of fetching each additional
pail is
The United States does not impose tariffs or quotas; however, many of its trading
partners do have these trade restrictions.
You are thinking of purchasing a 5-year bond, with a face value of $8,000, on the
secondary bond market. The bond was issued three years ago, so it will mature two
years from today. If the interest rate is 10 percent (0.10) per year, what is the value of
the bond?