Refer to Scenario 2. Once the full impact of the Fed's open market sale works its way through the banking system, what is the maximum change on the money supply as a result of these two events?
A) Money supply rises by $5,000.
B) Money supply rises by $500,000.
C) Money supply falls by $50,000.
D) Money supply falls by $500,000.
Ans: D) Money supply falls by $500,000.
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Long-term contracts are desirable for both firms and workers for each of the following reasons EXCEPT one. Which of the following does NOT explain the desirability of long-term contracts?
A) Wage negotiations are costly and time consuming on both sides. B) Contracts insulate workers from changing economic conditions such as decreases in aggregate demand. C) The incidence of strikes decreases because the contracts are binding for three years. D) Contracts reduce uncertainty.
Public goods
A) are overproduced by unrestrained markets. B) are simply private goods that the government provides. C) cannot be consumed by more than one person without the degradation of the value of the good. D) can be consumed by more than one person without degradation of the value of the good.