There are not enough of four goods to satisfy the wants of people. For good A, this is true when the price is $100. This is true for good B at a price of $10, for good C at a price of $1, and for good D at a price of zero. Which situation reflects

If the Federal Open Market Committee wants to decrease the money supply through open market operations it will

A) buy U.S. Treasury Securities. B) decrease the discount rate. C) sell U.S. Treasury Securities. D) increase the discount rate.

In the face of rising costs, some firms reduce the quality of the goods they produce rather than maintain quality and increase prices. How would behavioral economics explain this strategy?

A. People have an aversion to losses, and consumers are more likely to feel the loss of a price increase than a quality reduction. B. Consumers are more tolerant of diminished quality because diminishing marginal utility causes people to get rid of goods sooner than in the past. C. Firms are myopic in their decision making, with little regard for future profitability. D. The availability heuristic will cause people to buy whatever is offered, regardless of the quality.