When the Fed sells government securities, banks' reserves ________, the quantity of money ________, and the federal funds rate ________
A) decrease; decreases; falls
B) decrease; increases; falls
C) increase; increases; falls
D) increase; decreases; rises
E) decrease; decreases; rises
E
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In a television advertisement for AFLAC supplemental health insurance, an ice skater says to his skating partner, "Do you want to try a triple jump?" She responds, "Why not, I have AFLAC." This response illustrates the:
A. principal-agent problem. B. adverse selection problem. C. moral hazard problem. D. free-rider problem.
Refer to the graph below. Assume that the economy is in initial equilibrium where AD1 intersects AS1. If there is a decrease in aggregate demand to AD2, then according to mainstream economists, if prices are flexible and wages are not, this will result in an equilibrium at point:
A. B
B. C
C. D
D. E