When the Fed raises the discount rate, all of the following result except
A. It sends a signal that it is reluctant to lend reserves.
B. It expands the lending capacity of the banking system.
C. It sends a signal that it is moving toward a slower growth rate for the money supply.
D. The cost of borrowing reserves for member banks increases.
Answer: B
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If the demand for a consumer good decreases, the demand for resources required to make the good will
a. increase. b. remain the same, but the quantity demanded will increase. c. decrease. d. increase or decrease depending on whether the demand for the product is elastic or inelastic.
In the first graph below, illustrate the cost curves and demand conditions for a monopolistic ally competitive firm making short-run profits. In the second graph, illustrate what those conditions are most likely to be in the long run. Explain the major
differences in the two graphs. What will be an ideal response?