If banks do not have enough reserves to satisfy the reserve requirement, they can
A. Lend additional reserves in the federal funds market.
B. Buy securities.
C. Sell securities.
D. Pay off discount loans at the Federal Reserve bank.
Answer: C
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In which of the following situations would you hedge using a futures contract?
A. You are long in the cash market, the price is at a historical high, and you are certain that the price will decline. B. You are long in the cash market, the price is at a historical low, and you are certain that the price will increase. C. You are short in the cash market, the price is at a historical high, and you are certain that the price will decrease. D. You are short in the cash market, the price is at a historical low, and you are certain that the price will decrease further.
The demand curve for gasoline should be
A) more elastic in the long run than in the short run. B) less elastic in the long run than in the short run. C) as elastic in the long run as it is in the short run. D) more or less elastic in the long run versus the short run depending upon supply conditions.