During a period of inflation, the Fed is likely to:
A. sell government securities to banks in order to reduce the amount of loanable funds.
B. buy government securities from banks in order to reduce the amount of loanable funds.
C. cut the discount rate to increase the affordability of loanable funds.
D. cut the required reserve ratio in order to reduce the amount of excess reserves banks have to loan out.
Answer: A
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The market mechanism is more efficient in allocating resources between time periods than it is in allocating resources among different industries
a. True b. False Indicate whether the statement is true or false
Mike’s Mealbarn is a competitive firm in the hot dog stand business. How will each of the following affect the short-run demand for labor at Mike's?
(i) Mike buys a new grill that makes the cooks more productive. (ii) Increasing numbers of people become vegetarians. (iii) A health inspector fines Mike $500 for unsanitary conditions, but fortunately Mike's customers don't learn about it.