Other things equal, if the Fed increases the discount rate,
A) the monetary base will decrease and the money supply will remain constant.
B) the monetary base and the money supply will both decrease.
C) the money supply will decrease and the monetary base will remain constant.
D) the monetary base will decrease and the money supply may increase or remain constant.
B
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Which of the following statements is true?
A) A decrease in demand causes equilibrium price to fall; the decrease in price then results in a decrease in quantity supplied. B) If both demand and supply increase, there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. C) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. D) A decrease in demand causes a decrease in equilibrium price; the decrease in price causes supply to decrease.
A policy that directly targets the externality:
A. encourages innovation, which matches the goal to stop production of the externality. B. gives firms incentives to find different ways to do things, rather than pay for the right to create the externality. C. Both of the above statements is true. D. None of these statements are true.