Which of the following changes is observed when the Fed increases the federal funds rate?
a. Inflation is brought to an immediate halt
b. The inflation rate increases for several months, but then begins to decrease.
c. Major banks try to offset this change by lowering the interest rates they charge on loans.
d. Major banks try to offset this change by lowering the interest rates they pay on savings deposits.
e. Major banks raise the prime interest rate that they charge to their best customers.
e
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Assume X is an inferior good. If the incomes of people who buy X increase, demand for X will increase as well, but by a smaller percentage than the increase in income
Indicate whether the statement is true or false
In a monopolistically competitive scenario, as more firms enter into the industry, the long run demand curve for most firms will tend to become: a. more inelastic. b. vertical
c. horizontal. d. more elastic.