When the Federal Reserve wishes to, in the short run, increase real GDP, it
A. will increase the money supply by selling bonds.
B. will increase the money supply by buying bonds.
C. will decrease the money supply by selling bonds.
D. has no policy options that will accomplish this.
Answer: B
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Bianca consumes pizza. Marginal utility theory predicts that when the price of pizza increases
A) Bianca's total utility from pizza will increase. B) Bianca will buy less pizza. C) Bianca's marginal utility from pizza will increase. D) Bianca's demand curve for pizza will shift leftward.
Used car buyers will believe that a car is of good quality when the seller signals the car's high quality by offering a warranty when
A) a warranty on a lemon is costly to the seller. B) warranties are offered on all cars. C) warranties are only offered on lemons. D) a warranty on a good car is a false signal.