Explain the issues involved with the Fed acting as a lender of Last Resort (LLR)
What will be an ideal response?
On the one hand, LLR enables the Fed to avoid panic and disturbance to proper functioning of financial markets. On the other hand, using the policy may cause problems of moral hazard.
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In the case of Intimate Bookshop v. Barnes & Noble, Intimate alleged that Barnes & Noble
a. was bundling products in order to reduce competition. b. used technological advances to sell at lower prices. c. was buying books at discriminatory prices. d. had merged with other competitors in an effort to gain monopoly power.
Refer to the information provided in Figure 8.6 below to answer the question(s) that follow. 
Figure 8.6 Refer to Figure 8.6. Average total cost is represented by
A. curve 1. B. curve 2. C. curve 3. D. line segment AB.