The Fed purchases German bonds from commercial banks. Which of the following best describes the impact on the Fed's and the Banking System's balance sheets resulting from this transaction?
A. The Fed's assets and liabilities do not change, only the compositions of the assets change. For the banking system, assets and liabilities increase.
B. The Fed's assets and liabilities increase, the banking systems assets and liabilities decrease.
C. The Fed's assets increase and its liabilities increase, for the banking system, the value of assets and liabilities do not change, only the composition of assets changes.
D. The Fed's assets increase and its liabilities decrease, for the banking system, the value of assets and liabilities do not change, only the composition of assets changes.
Answer: C
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To the extent that the value of money is less predictable, it becomes
A) more acceptable as a store of value. B) less acceptable as a medium of exchange. C) more acceptable as a standard of deferred payment. D) more acceptable as a unit of account.
Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is $8; Kyle's cost per ton is $12. Refer to the information given and assume that
the market price of sockeye salmon is $15 per ton. If Kara pays Kyle $5 per ton for his ITQs, and if she then catches her new limit of 4,000 tons, their combined profit would be: A. $18,000. B. $22,000. C. $20,000. D. $4,000.