If the Fed wants to lower the federal funds rate, it should:
A. increase the discount rate.
B. increase the reserve ratio.
C. buy government securities in the open market.
D. sell government securities in the open market.
C. buy government securities in the open market.
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According to your authors, market clearing
A) is planned by all buyers. B) is planned by all sellers. C) is planned by all buyers and sellers. D) is planned by economists and government agencies. E) is an unintended consequence of people pursuing their own plans.
The Securities and Exchange Commission of the U.S. government requires that mutual fund companies publish a long and detailed prospectus which covers an array of areas including the cost of owning the fund, the types of stocks the fund invests in,
the management fee, administrative fees and an assessment of the type of risk that holding the fund represents. This is clearly designed with the intent of mitigating the imperfect information problem. However, can you think of any reason why the value of these documents is likely to be quite marginal?