When the Fed buys government bonds on the open market from commercial banks, the
a. assets of these banks fall
b. assets of the Fed falls
c. assets of the banks rise
d. liabilities of the bank rise
e. liabilities of the bank fall
C
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Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is 10 coffee per 1 unit cream) are invited to a weekend long event (during which they can easily consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is given 80 units of coffee. The contract curve in the Edgeworth box would be
a. a right angle connecting the lower left corner with the upper right corner. b. a curve (not a line) connecting the lower left corner with the upper right corner. c. a line connecting the lower left corner with the upper right corner. d. a right angle connecting the upper left corner with the lower right corner.
If the cross-price elasticity of demand between lettuce and salad dressing is negative, then when the price of lettuce rises, the demand for salad dressing will ________.
A. increase B. become more inelastic C. decrease D. remain the same