Which of the following is a reason that the Fed does not traditionally attempt to limit asset price bubbles?
a. The Fed's policies cannot be targeted at only one sector of the economy.
b. Price changes for one asset or one industry cannot have a substantial impact on the entire economy.
c. The FDIC rather than the Fed is responsible for recognizing bad lending practices.
d. all of the above
a
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When the cost of the CPI market basket increases from one year to the next, we know that
A) on the average, current prices are less than past year prices. B) the quantities of the goods and services contained in the CPI market basket have increased on the average. C) the prices of the goods and services contained in the CPI market basket have increased on the average. D) on the average, current prices are below base year prices. E) either the quantities of the goods and services contained in the CPI market basket have increased on the average and/or the prices of the goods and services contained in the CPI market basket have increased on the average.
In an attempt to raise sales, Hannah cut prices in her bookstore by 20 percent. If the dollar value of her sales remained constant, that indicates
a. old customers bought no more books. b. no new customers bought books. c. the quantity of books sold increased 20 percent. d. the demand curve is vertical.